1HFY21 CNP of RM75.0m is above our (78%) and consensus’ (66%) estimates due to higher CPO prices. HSPLANT will continue to shine in 3QFY21 on elevated CPO prices. Raise FY21-22E CNP by 56-20%. Maintain OUTPERFORM with a higher TP of RM2.30 (from RM2.15) @ rolled-over FY22E PER of 16x (from 18x). The stock is attractive in our books given: (i) 24% discount to closest peer, (ii) appealing dividend yield of ~5%, and (iii) strong net cash/share of c.RM0.32.
Beat expectations. 2QFY21 registered a core net profit (CNP) of RM52.1m (+127% QoQ; +274% YoY), bringing 1HFY21 CNP to RM75.0m (+329% YoY) which is above our (78%) and consensus’ (66%) estimates due to higher-than- expected CPO prices. 1HFY21 FFB output of 279k MT (-2% YoY), at 44% of our full-year estimate and DPS of 1.5 sen are within expectations.
Results’ highlight. YoY, although FFB output was slightly lower (-2%), 1HFY21 CNP surged (+329%) on the back of higher average CPO/PK prices (+60%/+72%). QoQ, 2QFY21 CNP leapt (+127%), propelled by higher CPO/PK prices (+13%/+5%) and FFB output (+14%).
Pure Malaysian upstream play. Having 100% of its estates in Sabah (no cap in CPO price), the group is able to fully capitalize on higher CPO prices, evident from its 2QFY21 average CPO price (highest in our coverage). With QTD-3QFY21 CPO price up 4% QoQ, the strength of this pure Malaysian upstream planter will continue to be seen in 3QFY21. Thereafter, earnings should moderate in line with an expected decline in CPO price.
Raise FY21-22E CNP by 56-20% on higher realized CPO price of RM3,700- 3,200/MT (vs. RM3,000/MT previously).
Maintain OUTPERFORM with a higher TP of RM2.30 (from RM2.15) based on rolled-over FY22E PER of 16x (from 18x), reflecting -0.5SD from mean. HSPLANT is presently traded at Fwd. PER of ~13x, which is attractive in our eyes given: (i) it is at c.24% discount to closest peers, (ii) blockbuster 3QFY21 ahead, (iii) appealing dividend yield of ~5%, and (iv) strong net cash position of RM257m (translating into ~RM0.32/share), which eliminates liquidity risk. The group’s strong balance sheet will also allow it to undertake any potential upstream acquisitions which will boost FFB growth. Note that HSPLANT’s average CPO price is the highest among planters under our coverage given its minimal forward selling policy and pure Malaysian upstream estates.
Risks to our call are sharp decline in CPO prices, severe labour shortage, and significant rise in fertilizer/transportation costs.
Source: Kenanga Research - 25 Aug 2021
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Created by kiasutrader | Aug 26, 2024
Created by kiasutrader | Aug 26, 2024