IJMP’s 9MFY20 core net profit of RM21.8m (9MFY19 core net loss of RM21.9m) came in above our expectations, mainly due to a strongerthan-expected 3QFY20 on a qoq increase in the CPO sales volume and ASP. We have raised our FY20/21E core EPS by 54.8%/11.1%, mainly to account for higher CPO price and production assumptions. Given the earnings forecast revisions, our DCF-derived TP has been raised to RM2.43, and we maintain our BUY rating on IJMP.

3QFY20: Back to Black

IJM Plantations’ (IJMP) 3QFY20 revenue increased by 37.6% qoq to RM237.8m, mainly due to higher sales volumes and ASPs of both CPO and PKO. The total sales volumes of CPO and PKO in 3QFY20 increased by 7.2% and 6.7% qoq, respectively, to 78.3k MT and 6.3k MT, attributable to higher production. Its CPO ASPs for Malaysia and Indonesia stood at RM2,437/MT (2QFY20: RM1,983/MT) and RM2,160/MT (2QFY20: RM1,740/MT), respectively, while PKO ASPs for Malaysia and Indonesia were at RM2,819/MT (2QFY19: RM2,239/MT) and RM1,901/MT (2QFY19: 1,814/MT), respectively. IJMP posted a PBT of RM33.3m in 3QFY20 vs. a LBT of RM5m in 2QFY20 – higher profits from both Malaysian and Indonesian operations. After excluding one-off items, IJMP reported a core net profit of RM31m in 3QFY20 vs. a RM0.4m core net loss in the prior quarter.

Higher Revenue in 9MFY20 Due to An Increase in Sales Volumes

For 9MFY20, IJMP reported an increase in revenue to RM543.7m, up by 16.7% yoy, mainly due to higher contribution from both Malaysian and Indonesian operations. The 9MFY20 CPO ASPs for Malaysia and Indonesia stood at RM2,146/MT (9MFY19: RM2,204/MT) and RM1,951/MT (9MFY19: RM1,881/MT), respectively, while PKO ASPs for Malaysia and Indonesia were at RM2,465/MT (9MFY19: RM3,240/MT) and RM1,996/MT (9MFY19: 3,169/MT), respectively.

Source: Affin Hwang Research - 26 Feb 2020