INVESTMENT HIGHLIGHTS

• 9MFY18 core earnings below expectations

• 9MFY18 earnings was affected by low CPO price

• Earnings estimate reduced slightly

• Maintain BUY with lower TP of RM10.50

9MFY18 core earnings below expectations. Genting Plantations Berhad (GENP) 9MFY18 core net income (CNI) of RM134m was below expectation as it makes up 47% of both ours and consensus full year earnings forecasts. The negative deviation could be attributed to weaker than expected FFB production. In our CNI calculation, we have excluded RM17.5m net surplus arising from Government acquisition of land, RM0.7m of forex gain and RM0.4m other one-off items. As expected, no dividend was announced.

9MFY18 earnings was affected by low CPO price. 9MFY18 CNI is lower by 42%yoy to RM134m due to weaker CPO price (-19%yoy to RM2235 per tonne).

Earnings estimate reduced slightly. We have reduced our FY18 CNI forecast by 6% to RM268m. For FY19, we trim our FY19 CNI forecast by 2% to RM330m. We have assumed lower FFB production.

Maintain BUY with lower TP of RM10.50. Our TP is based on Sum Of Parts (Refer Page 2). The lower Target Price reflects the lower valuation for the plantation division after reduction in FFB volume estimate. We like the Company for its young plantation estate in Indonesia.

Source: MIDF Research - 30 Nov 2018