• IJMP posted a core net profit of RM72.5m in 9MFY21, up >100% yoy, given the higher sales volume of CPO as well as higher average selling prices achieved. The 9MFY21 results came in within our expectation
• As Such, We Made No Changes to Our FY21-23E Earnings Forecasts
• Maintain BUY rating on IJMP with an unchanged DCF-derived TP of RM2.43

9MFY21 Core Net Profit of RM72.5m – Within Our Expectations

IJM Plantations (IJMP) 9MFY21 revenue increased by 26.8% yoy to RM689.3m, mainly due to higher sales volume of CPO as well as higher selling prices. The total sales volume of CPO in 9MFY21 increased by 10.7% yoy to 225.9k MT, attributable to higher production for the period. Meanwhile, IJMP’s CPO ASPs for Malaysia and Indonesia stood at RM2,747/MT (9MFY20: RM2,146/MT) and RM2,324/MT (9MFY20: RM1,951/MT), respectively, while PKO ASPs for Malaysia and Indonesia were at RM3,404/MT (9MFY20: RM2,465/MT) and RM2,510/MT (9MFY20: 1,996/MT), respectively. IJMP posted a PBT (inclusive of forex gains and fair-value loss on CPO swaps) of RM211.7m in 9MFY21, up >100% yoy. After excluding one-off items, IJMP posted a higher core net profit of RM72.5m, up >100% yoy. This was within our expectation, accounting for 75% of our FY21 forecast.

Stronger Core Net Profit Qoq

Sequentially, IJMP’s 3QFY21 revenue increased by 28.7% qoq to RM272m, attributable to higher CPO and PKO selling prices coupled with higher FFB production (especially from the Indonesian estates). The higher selling price in 3QFY21 was partly attributable to the improved demand, tight stock levels, increase in prices of other edible oils and weather uncertainties. For 3QFY21, IJMP reported a PBT of RM98.9m vs an LBT of RM2.4m in 2QFY21 (due to forex gains in 3QFY21 vs forex loss in 2QFY21, as a result of the strengthening of Rupiah against the US$ and JPY). After adjusting for one-off items, IJMP posted a higher core net profit of RM44.8m in 3QFY21, up 11.5% qoq.

Maintain BUY and TP of RM2.43

We make no changes to our FY21-23E earnings forecasts, given the 9MFY21 results were within our expectations. Maintain our BUY rating on IJMP with an unchanged DCFderived TP of RM2.43.

Key Risks

Key downside risks include: 1) a weaker economic growth leading to lower consumption of vegetable oils; 2) a drop in CPO prices; 3) lower-than-expected FFB and CPO production; and 4) changes in government policies.

Source: Affin Hwang Research - 26 Feb 2021