Journey to Wealth
IJM Plantations Bhd - 1Q13 results within expectation
Period 1Q13
Actual vs. Expectations
The 1Q13 core net profit of RM28m made up 15% each of both the consensus' FY13 earnings of RM37m and our earnings forecast of RM182m.
We deem this to be in line with expectations as 1Q13 FFB volume is typically lower.
Recall that in FY10, 1Q10 net profit me up only 11% of the full year earnings.
Dividends As expected, no dividend was announced.
Key Results Highlights
YoY, 1Q13 core net profit declined 44% to RM28m as FFB production fell 37% to 106,620mt.
QoQ, 1Q13 core net profit improved 54%. As CPO prices were up by only 2% to RM3192/mt, we believe IJMP may have sold more of its inventories in 2Q12. Fertiliser application may also be less in 2Q12. Reported net profit soared 210% in the absence of the RM11m impairment for the biomass co-generation plant in 4Q12.
Outlook FFB growth should be flat in FY13E as a result of the tree stress impact in 1Q13. However, we expect its growth to resume in FY14E at 8% as more of its Indonesian estates mature.
On the overall, the FY13-14E core earnings growth of 4%-8% seems unexciting at the current juncture.
Change to Forecasts
Maintaining our FY13-14E earnings of RM182mRM196m based on FFB productions of 668k-719k mt and average CPO price assumptions of RM3150-RM3100 in CY12-CY13.
Rating Maintain MARKET PERFORM
The flattish CPO price outlook for CY12 at RM3150/mt (-2% YoY) should keep IJMP share price upside limited.
Valuation Maintaining our TP of RM3.65 based on an unchanged FY13E PER of 16.0x (+0.5SD from the 5-year average PER). This is in line with other pure planters under our coverage with Target PE range of 15.3x-16.5x.
Risks Sustained CPO price drop below RM3,000/mt.
Source: Kenanga
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