INVESTMENT HIGHLIGHTS

• 9MFY18 earnings in line

• 9MFY18 CNP grew by 12% yoy to RM925m

• Lack of catalyst going forward

• Earnings estimate maintained

• Maintain NEUTRAL with TP of RM4.50

9MFY18 earnings in line. IOI Corporation Berhad (IOICORP) 9MFY18 core net profit (CNP) of RM925m is within our expectation at 75% of our full year forecast. It was above consensus (81% of consensus estimate) as consensus may have underestimated the FFB growth for IOICORP. As expected, no dividend is announced in 3Q.

9MFY18 CNP grew by 12% yoy to RM925m as FFB volume improved 17% yoy to 2.75m tonnes. This has more than offset the 6% decline CPO price to RM2,593 per tonne. However, 3QFY18 CNP declined 26% yoy to RM209m as CPO price was down by 21% yoy to RM2471 per tonne.

Lack of catalysts going forward. As the special dividend of 11.5 sen has gone ex on 16-March-2018, we believe that there will be limited catalyst going forward.

Earnings estimate maintained. We maintain our FY18 CNP of RM1.23b. We also maintain our FY19 CNP of RM1.26b.

Maintain NEUTRAL with TP of RM4.50: Our TP is based on 26.3x PE on FY18 EPS reflecting +1.0SD valuation. IOICORP share price is supported by its strong fundamentals with good FFB growth and improvement in balance sheet post the 70% stake sale in Loders Croklaan.

Source: MIDF Research - 17 May 2018