IJMP’s core net profit of RM161.1m in 1HFY22 (+272.7%) beat expectations, accounting for 84.5-86.8% of our and consensus full-year estimates, due mainly to higher-than-expected realised palm product prices. We are ceasing coverage on IJMP, as the offeror (KLK) has secured 90% of IJMP shares and IJMP will be delisted from Bursa Malaysia with effect from 26 Nov 2021.

Beat expectations. 2QFY22 core net profit of RM95.4m (QoQ: +45.2%; YoY: +147.4%) took 1HFY22 sum to RM161.1m (+272.7%). The results beat expectations, accounting for 84.5-86.8% of our and consensus full-year estimates, due mainly to higher-than-expected realised palm product prices.

Exceptional items (EIs) in 1HFY22. Core net profit of RM161.1m was arrived after adjusting for unrealised forex gain (RM11.5m) and fair value change in CPO pricing swaps.

QoQ. Core net profit increased by 45.2% to RM95.4m in 2QFY22, driven mainly by higher sales volume in Malaysia operations and higher realised palm product prices, albeit partly moderated by lower sales volume in Indonesia operations.

YoY. Core net profit more than doubled to RM95.4m in 2QFY22 (from RM38.6m SPLY), boosted mainly by higher sales volume in Indonesia operations and significantly higher realised palm product prices, which altogether more than mitigated lower sales volume in Malaysia operations.

YTD. Core net profit expanded by 272.7% to RM161.1m in 1HFY22, boosted mainly significantly higher realised palm product prices.

FFB output. FFB output fell 1.6% to 516k tonnes in 1HFY22, as higher output in Indonesia (+10.6%, due to a shift in cropping pattern, we believe) was more than negated by a 14% decline in Malaysia operations’ FFB output (due to the tall palms effect in the Sugut region).

Forecast. Maintain.

Cease coverage. We are ceasing coverage on IJMP, as the offeror (KLK) has secured more than 90% of IJMP shares and IJMP will be delisted from Bursa Malaysia with effect from 26 Nov 2021. As such, our earnings forecasts, TP of RM3.10 and HOLD rating should no longer be used as a reference going forward.

Source: Hong Leong Investment Bank Research - 22 Nov 2021