9MFY21 CNP of RM61.4m is above both our (105%) and consensus’ (98%) expectations. 9MFY21 FFB output (at 75%) and absence of DPS are within expectation. We think 4QFY21 earnings could decline sequentially on higher production cost (seasonal decline in Indonesia and higher manuring activities). However, on higher CPO prices, we raise FY21-22E CNP by 52-42%Upgrade to MARKETPERFORM with a higher TP of RM1.95 on CY21E PER of 18x.

Above expectation. 9MFY21 registered CNP of RM61.4m which is above both our/consensus’ expectations at 105%/98%, respectively, due to higher CPO prices. 9MFY21 FFB output of 821k MT (+2% YoY) is within our estimate at 75%. The absence of DPS is also as expected.

Lifted by higher CPO price. YoY, boost from higher average CPO price (+24%) and higher FFB output (2%) resulted in a 181% improvement in FY20 CNP to RM61.4m. QoQ, 3QFY21 recorded CNP of RM37.1m (+9%), due to: (i) higher average CPO price (+14%), and (ii) seasonally higher FFB output (+19%).

Indonesia production has peaked. Despite higher CPO price (QTD-4QFY21: +13% QoQ), we think 4QFY21 earnings could decline sequentially due to higher CPO production cost. Our view is premised on: (i) expected production decline in Indonesia (after this peak in November, in our view), and (ii) potentially higher manuring activities in 4QFY21. We expect seasonally lower 4QFY21 FFB output of c.250-270k MT for the group.

Raise FY21-22E CNP by 52-42% on higher FY21-22E CPO price of c.RM2,700/MT each.

Upgrade to MARKET PERFORM with a higher TP of RM1.95 (from RM1.70) after switching valuations to a rolled-over CY21E PER of 18x. At current price, IJMP is traded at CY21E PER/PBV of 16.8x/1.24x (9%/46% premium to closest peer), offering limited upside, in our opinion. Risks to our call include: (i) higher/lower-than-expected CPO price realized, (ii) sever labour shortage, and (iii) a precipitous rise/decline in labour/fertilizer/transportation costs.

Source: Kenanga Research - 26 Feb 2021