INVESTMENT HIGHLIGHTS

• 1QFY19 Core Net Income is within expectation

• Plantation division earnings is affected by low CPO price

• Weak performance from PSCD division

• Earnings estimate maintained

• Maintain NEUTRAL with TP of RM1.90

1QFY19 Core Net Income was within expectation. Fima Corporation Berhad (FIMACOR) 1QFY19 Core Net Income (CNI) of RM6.0m makes up 17% of our full year FY19 forecast. We deem the result as within expectation due to seasonally low FFB production in 1Q. Core net income excluded the RM0.6m of forex gain and other one off items. As expected, no dividend was announced in the first quarter.

Plantation division earnings was affected by low CPO price. Plantation division PBT dipped 65%yoy to RM3.8m as revenue declined by 55%yoy to RM19.0m. This was caused by lower CPO price of RM2102 per tonne (down 18%yoy) and lower FFB volume of 33,013 tonnes (down 24%yoy).

Weak performance from PSCD division. "Production of security and confidential documents" division revenue also declined by 14%yoy to RM31.2m. As a result, PBT from the "production of security and confidential documents" division declined by 15%yoy to RM4.4m.

Earnings estimate maintained. We maintain our FY19 CNI estimate of RM35.7m. We expect FIMACOR earnings to pick up from 2QFY19 onwards due to seasonally stronger FFB production.

Maintain NEUTRAL with TP of RM1.90. Our TP is based on SumOf-Parts valuation (Refer Below). Despite the challenging earnings prospect for both plantation and PSCD divisions, FIMACOR balance sheet is strong with net cash position of RM211m.

Source: MIDF Research - 21 Aug 2018