• 1HFY17 earnings within expectations

• Earnings lifted by plantation division

• Positive earnings and FFB production outlook

• Upgrade to BUY with a revised TP of RM12.06

1HFY17 earnings within expectations. Genting Plantations Berhad (GENP) 1HFY17 core net income of RM150.9m was largely within expectations, meeting 45% and 41% of our and consensus full year forecast. Dividend of 5.5sen per share was announced.

Earnings lifted by plantation division. On sequential basis, core net income of RM76.2m increased by 2%qoq as 12.3% increase in FFB production has compensated the 12%qoq decline in CPO prices. Meanwhile, 2QFY17 core net earnings increased sharply by 163%yoy, mainly due to increase in FFB production (+38.3%yoy to 456k MT) and higher CPO prices (+4%yoy to RM2694/mt). Cumulatively, 1HFY17 core net income climbed 157%yoy to RM150.9m, due to double-blessing of higher FFB production (+33.5%yoy to 862k MT) and higher CPO prices (+17%yoy to RM2861/mt). Meanwhile, earnings contribution from property division was lower whereby profit before tax of the division declined by 42%yoy due to lower property sales in Johor.

Positive earnings and FFB production outlook. Prospect for FFB production in FY17 is positive as FFB production recovers from lagged impact of drought. We are forecasting production growth rate of 13.0% for FY17, in line with management expectation of double digit growth rate in FY17.

Upgrade to BUY with a revised TP of RM12.06. We maintain our earnings forecast for FY17/18. Our TP is revised higher to RM12.06 from RM11.55 after we roll over our valuation to FY18. We like GENP due to strong 1HFY17 earnings surge of 157%yoy to RM150.9m and robust FY17 FFB growth expected at 13% due to its young age profile.

Source: MIDF Research - 24 Aug 2017