Journey to Wealth
Genting Plantations - Cushioned by Indonesia Buy
- Affirm BUY on Genting Plantations Bhd (GenP) with an unchanged fair value of RM10.65/share. Our fair value implies an FY13F PE of 16x. GenP's PE ranged from a low of 5x to a high of 28x in the past seven years. The group's average PE was 16x.
- We have revised downwards GenP's FY12F earnings by 4.5% to account for a relatively flat FFB production growth in FY12F.
- Compared to other plantation companies, the YoY fall in GenP's net profit in 1QFY12 was not as severe. The group's net profit was partly supported by a 3% YoY increase in FFB production in 1QFY12.
- The expansion in GenP's oil palm production in Indonesia helped compensate for an estimated 2% YoY decline in FFB output in Malaysia in 1QFY12. GenP's plantation division in Indonesia accounted for 5% of group FFB production in 1QFY12.
- In spite of rising palm oil production from Indonesia, GenP's average CPO price realised of RM3,179/tonne was still close to MPOB's (Malaysian Palm Oil Board) average spot price of RM3,190/tonne in 1QFY12. Comparing 1QFY12 against 1QFY11, average CPO price realised fell 13.7% from RM3,682/tonne to RM3,179/tonne.
- GenP has revised its forecast of FFB production growth for FY12F from 8% to 9% to zero. FFB output in Malaysia is expected to remain weak until 2HFY12. This is due to lag impact from the hot and dry weather, which took place in early-FY10. Overall, FFB output in Malaysia is estimated to decline 6% in FY12F.
- However, GenP's FFB production in Indonesia is envisaged to grow at a robust rate of 5% to 6% in FY12F. This is underpinned by an increase in mature areas. Mature areas are anticipated to expand to 17,000ha by endFY12F from 6,294ha at end-FY11.
- GenP's cost of production is expected to climb 17% from RM1,064/tonne in FY11 to RM1,250/tonne in FY12F. The increase in cost of production will be due to higher wages and fertiliser costs. Fertiliser costs rose 15% to 20% YoY in 1QFY12.
- GenP's cost of production of RM1,500/tonne in 1QFY12 is anticipated to decline in the coming few financial quarters underpinned by higher volume of production and flat fertiliser costs. Fertiliser costs in 2HFY12 are envisaged to be the same as 1HFY12.
Source: AmeSecurities
Related Stocks
| Chart | Stock Name | Last | Change | Volume |
|---|
More articles on Journey to Wealth
Ekovest: No plan to launch another offer for Iskandar Waterfront City
Created by kiasutrader | Mar 29, 2018
Kenanga Research - On our Portfolio - Parliament dissolution around the corner?
Created by kiasutrader | Mar 25, 2013
Plantation Sector - Proposed accounting standard scrapped OVERWEIGHT
Created by kiasutrader | Mar 25, 2013
Pavilion Reit - Limited upside, earnings upside have been priced in HOLD
Created by kiasutrader | Mar 25, 2013
Discussions
Be the first to like this. Showing 0 of 0 comments
Post a Comment
Featured Posts
Introducing MY's First IPO Fund for Sophisticated Investors!
New Update. Discover investment communities that resonate with your ideas
M & A Value Partners IPO Equity Fund has been launched - Targeted 13% Return p.a
Latest Videos
MQ Trading Signals
Time
Signal
Duration
Type
2024-11-28 16:10:00
EMA 5
5 Mins
SELL
2024-11-28 15:00:00
TURTLE SYSTEM 20
10 Mins
SELL
2024-11-28 15:00:00
TURTLE SYSTEM 55
10 Mins
SELL
2024-11-28 15:00:00
TURTLE SYSTEM 20
5 Mins
SELL
2024-11-28 15:00:00
TURTLE SYSTEM 55
5 Mins
SELL
Apps
Top Articles
1
Dragon Leong blog
2
THE INVESTMENT APPROACH OF CALVIN TAN
3
Follow Kim's Stockwatch!
4
Good Articles to Share
The 'Fast Money' traders share the stocks they are thankful for this holiday season
5
Good Articles to Share
6
Good Articles to Share
7
Good Articles to Share
8
Good Articles to Share
Alina Habba says America wants the DOJ to stop this lawfare and these witch hunts
#
Stock
Score
Daily Stocks
Stock Name
Last
Change
Volume
Stock Name
Last
Change
Volume
Stock Name
Last
Change
Volume
Featured Advertisers / Partners
Ride The Bull Short The Bear
CS Tan
4.9 / 5.0
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
