INVESTMENT HIGHLIGHTS

• FY19 core net income above estimate

• CNI for the year increased by 4%yoy to RM33.6m

• 4QFY19 CNI surged 302% to RM11.4m even as revenue decline by 6% to RM69.8m

• CNI estimates for FY20E/FY21F unchanged for now

• Maintain NEUTRAL with an unchanged TP of RM1.79

FY19 core net income above estimate. Fima Corporation Berhad’s (FIMACOR) FY19 core net income (CNI) of RM33.6m was above our expectation making up 111% of our full year estimate. The positive variation is due to a strong rebound in its oil palm production and processing segment. We have excluded RM23.6m of writeback on impairment loss on property, plant and equipment in our CNI calculation. A final dividend of 7.5 sen was announced, bringing yearto-date DPS to 12.5 sen, which is in-line with our estimate.

CNI for the year increased by 4%yoy to RM33.6m although revenue dropped 14%. The improved CNI can be attributed to better sales mix at its production and trading of security and confidential documents (PSCD), which led to higher profitability. Pre-tax profit for the PSCD division rose 34%yoy to RM30.5m while PBT for the oil palm production and processing segment recorded a 17.8%yoy increase to RM47.4m.

4QFY19 CNI surged 302% to RM11.4m even as revenue decline by 6% to RM69.8m. We have excluded foreign exchange loss amounting to RM2.0m from our CNI calculation. The better onyear CNI can be attributed to higher volume of CPO produced. Sequentially, CNI rose 2% as revenue improved by 31%qoq due to the oil palm production and processing division which saw revenue surged 96%qoq to RM34.0m.

CNI estimates for FY20E/FY21F unchanged for now. Although FY19A CNI is slightly above our expectation, we are maintaining our FY20E/FY21F numbers for now.

Maintain NEUTRAL with an unchanged TP of RM1.79 as we make no changes to our earnings estimates. Our TP is based on SumOf-Parts valuation (Refer Below). Although upside for the shares is limited in the near-term, FIMACOR’s net cash stood at RM205.9m, which can support its ~6.8% dividend yield.

Source: MIDF Research - 3 Jun 2019