THP's FY12  core  earnings  of  RM65.3m  (-47.7%  y-o-y)  missed  expectations  as  the steep  decline  in  realized  CPO  prices  (-14.1%  y-o-y)  overshadowed  production growth.  The  company  will  see  strong  output  growth  over  the  next  few  years following its recent purchase of planted areas, driven by  both external and organic growth.  We  raise  our  FY13-FY14  earnings  forecasts  by  33%  to  46%  but  tweak  our FY13-FY14  EPS  estimates  by  -5%  to  +4%  on  incorporating  the  issuance  of  new shares following the purchase. Maintain NEUTRAL, with FV of RM2.12.

Missing  estimates.  TH  Plantations  (THP)  registered  4QFY12  revenue  of  RM99.1m  (-24.4% y-o-y, +20.4% q-o-q) and core earnings ofRM18.4m (-51.3% y-o-y, -4.4% q-o-q) as production  growth  was  unable  to  offset  the  steep  decline  in  CPO  prices.  The  company experienced 18.0% y-o-y FFB production growth for the quarter while realized CPO prices fell at a sharper 29.4% y-o-y rate. Headline 4Q net profit was RM104.4m (+176.8% y-o-y, +443.5% q-o-q) due to a RM101.2m net asset fair value surplus booked into the quarter's earnings  following  the  completion  of  an  acquisition  from  Tabung  Haji.  Full  year  2012 revenue  and  earnings  of  RM375.8m  (-13.6%  y-o-y)  and  RM65.3m  (-47.7%  y-o-y)  missed expectations,  with  bottomline  reflecting  just  82.2%  and  86.7%  of  our  and  consensus estimates respectively.

Driven by external and organic growth. THP's FFB production grew 50.6% y-o-y for the last two months of the year following the company's acquisition of a  planted area  in  East Malaysia measuring about 14,810 ha. As a result, FY12's production grew by 6.1% y-o-y, also boosted by organic growth of 2.2%. We estimate FFB production to surge by 45.2% y-o-y  in  FY13,  driven  largely  by  external  growth but  also  by  organic  growth  of  7.8%. Following its rapid replanting initiative since 2007, THP has managed to inject young blood into  its  previously  old  tree  age  profile  in  its  pre-acquisition  planted  areas.  We  expect  a FY14 FFB production growth of 16.3% y-o-y, led mostly by a 22.9% output increase in its newly acquired estates.

Maintain NEUTRAL. We are raising our FY13 and FY14 earnings forecasts by 32.9% and 46.1%  respectively  after  incorporating  contributions  from  the  latest  acquisition.  However, we  trim  our  EPS  forecast  by  5.3%  for  FY13  and  nudge  up  the  FY14  numbers  by  4.1% following  a  sharp  40.4%  increase  in  share  outstanding  as  a  result  of  the  acquisition. We value THP at a FV of RM2.12, based on a 13.0x FY13 PER.

 Source: OSK