• 1QFY18 Core Net Income is within expectation

• Lower earnings in the manufacturing division

• Better performance from plantation division

• Earnings estimate maintained

• Maintain NEUTRAL with TP of RM2.50

1QFY18 Core Net Income is within expectation. Fima Corporation Berhad (FIMACOR) 1QFY18 Core Net Income (CNI) of RM10.2m is within expectation. Although it made up 19% of our full year earnings estimate, we are expecting seasonally stronger FFB production in the 2QFY18 and 3QFY18. Core net income exclude RM1m write down and other one off items. As expected, no dividend is announced.

Lower earnings in the manufacturing division. Key reason is the lower PBT from the "production of security and confidential documents" division by 62% yoy to RM5.2m. We gather that this division has experienced a decline in sales volume for a certain travel document.

Better performance from the plantation division. The plantation division PBT surged by 101% yoy to RM10.3m due to improved CPO price yoy and higher FFB volume.

Earnings estimate maintained. We maintain our FY18 CNI of RM54.9m. FY19 CNI is also maintained at RM59.0m.

Maintain NEUTRAL with TP of RM2.50. Our TP is based on SumOf-Parts valuation (Refer Page 3). Although we expect FY18 CNI to decline yoy, the stock is supported by good dividend yield of 5.3% and strong balance sheet with net cash position.

Source: MIDF Research - 23 Aug 2017