Journey to Wealth
United Malacca - OUTPERFORM - 28 June 2012
Period 4Q12 and FY12
Actual vs. Expectations
Broadly in line, FY12 net profit of RM85.9m made up 88% of the consensus forecast of RM97.5m and 92% of our forecast of RM93.0m.
FFB production is 6% below our expectation as the tree stress impact has been greater than expected.
Fertilizer cost has also turned out to be higher than expected.
Dividends A final dividend of 16 sen was announced (single tier, ex-date 12th of Sept 2012). Together with the interim dividend of 10 sen announced earlier, the total net dividend in FY12A is 26 sen (dividend yield of 3.6%).
Key Results Highlights
YoY, FY12 net profit increased 5% to RM85.9m due to a better FFB production (+11% YoY) and better CPO prices (+6% YoY).
YoY, 4Q12 net profit declined 46% to RM12.3m due to higher fertilizer costs and a lower FFB production caused by the tree stress impact.
QoQ, 4Q12 net profit decreased 42% to RM12.3m as a result of lower FFB production seasonally.
Outlook Fertiliser cost increase should moderate in FY13E.
Note that crude oil prices have softened to an average of US$93.50/barrel per barrel in 2QCY12 (vs. 1QCY12: US$103/barrel).
Change to Forecasts
FY13E-FY14E earnings cut by 5%-4% respectively to RM111m-RM114m.
FFB volume for FY13E-FY14E has been reduced by 2%-1% respectively to account for tree stress.
Assuming now higher fertiliser costs for both FY13E-FY14E by 3%-5% respectively.
Rating Maintain OUTPERFORM
UMCCA net dividend yield of 4.5% is the highest among planters under our coverage.
The average age profile of ~8 years old means the strong FFB growth can be sustained.
Valuation We have lowered our Target Price to RM7.70 (from RM8.00) based on an unchanged 14.1x Fwd PER on a lower FY13E EPS of 54.5 sen (previously 57.3 sen).
Risks Sustained drop in CPO prices.
Higher than expected fertiliser costs.
Source: Kenanga
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