INVESTMENT HIGHLIGHTS

• 1QFY19 normalised earnings of RM47m (-74.2%yoy) came in below ours and consensus expectations

• The upstream segment underperformed due to the sharp decline in CPO and PK price

• This was partially mitigated by improved earnings from the downstream segment as well as operational efficiencies

• The group is seeking to monetise its assets to pare down its borrowings

• Maintain NEUTRAL with an adjusted target price of RM4.50

Below expectations. Sime Darby Plantation Bhd’s (SDPL) 1QFY19 normalised earnings came in at RM47m, a decline of -74.2%yoy in comparison with QE March 2018. The contraction in earnings was mainly attributable to the sharp decline in CPO and PK prices (Refer to table 1). This was partially mitigated by improved earnings from downstream and operational efficiencies. All in, SDLP’s 1FY19 financial performance came in below ours and consensus expectations, accounting for merely 6.3%and 4.5% of full year FY19 earnings estimates respectively.

Source: MIDF Research - 3 Jun 2019