INVESTMENT HIGHLIGHTS

• 9MFY17 earnings within expectations

• 9MFY17 earnings improved 50% yoy

• 3QFY17 earnings decline yoy should be temporary

• Earnings estimate maintained

• Maintain BUY with TP of RM12.60

9MFY17 earnings within expectations. Genting Plantations Berhad (GENP) 9MFY17 core net income (CNI) of RM232.6m was broadly within expectation, meeting 69% and 67% of our and consensus full year forecasts. As expected, no dividend is announced in 3Q.

9MFY17 earnings improved 50% yoy. 9MFY17 CNI climbed 50%yoy to RM232.6m due to double-blessing of higher FFB production (+25%yoy to 1.35m tonnes) and higher CPO price (+10%yoy to RM2770 per tonne).

3QFY17 earnings decline yoy should be temporary. We gather that the decline in CNI by 18% yoy to RM79.1m in 3QFY17 is caused by the drop in FFB production from its Sabah estates, which was caused by the lagged impact of dryness in 2016. The decline is expected to be temporary as production has improved yoy in October. Hence, we expect 4QFY17 CNI to register yoy growth mainly backed by double digit growth in FFB production and stable palm oil price.

Earnings estimate maintained. We maintain our FY17 CNI forecast of RM337m. We also maintain our FY18 CNI forecast of RM385m.

Maintain BUY with TP of RM12.60. Our TP is based on Sum Of Parts (Refer Page 3). We like GENP due to strong 9MFY17 earnings surge of 50%yoy to RM232.6m and robust FY17 FFB growth expected at 13% due to its young age profile.

Source: MIDF Research - 23 Nov 2017