Chin Teck Plantations (CTP) ended FY24 on a positive note. The group’s net profit surged by 63.7% to RM87.3mil in FY24. In spite of this, we maintain HOLD on CTP with a fair value of RM8.50/share (vs. RM8.36/share previously) due to the group’s low liquidity. Our fair value of RM8.50/share is based on a FY25F PE of 8x, which is a 20% discount to the two-year average of 10x. We applied a 20% discount to account for the group’s low liquidity. We ascribe a 3-star ESG rating to CTP.

• Raised FY25F net profit by 27% to account for higher CPO price and margins. We were too conservative in our original earnings forecast for CTP. We had forecast that the group's net profit would drop by 12.5% in FY25F due to lower operating profit margin. Now, we estimate that CTP's net profit would improve by 11.2% to RM97.1mil in FY25F on the back of a higher CPO price and gross profit margin. We have assumed a stronger average CPO price of RM4,250/tonne for FY25F vs. RM4,000/tonne previously.
• Decent dividends. CTP's FY24 net profit was within our forecast. The group did not declare dividends in 4QFY24 as the group had already done so in 3QFY24. CTP's gross DPS amounted to 40 sen for FY24 (FY23: 20 sen), which implies a decent yield of 5.2%.
• Strong net profit growth of 63.7% in FY24. CTP's net profit soared to RM87.3mil in FY24 from RM53.4mil in FY23 underpinned mainly by a 26.1% surge in FFB. Average CPO price was RM3,915/tonne in FY24 compared to. RM3,985/tonne in FY23.
• Jump in FFB production in FY24. We attribute the strong FFB growth of 26.1% in FY24 to the absence of floods and acquisition of Fauzi-Lim Plantation in FY23. We believe that Fauzi-Lim Plantation accounted for 2% of CTP's FFB output.
• Normalised administrative expenses in FY24. CTP's administrative expenses declined by 4.7% to RM31.9mil in FY24. Recall that the group's administrative expenses climbed by 32.9% to RM33.5mil in FY23 due to the acquisition of Fauzi-Lim Plantation.
• Net profit edged down QoQ in 4QFY24. Comparing 4QFY24 against 3QFY24, CTP's net profit eased by 0.7% to RM22.5mil as CPO price slid to RM3,983/tonne from RM4,076/tonne.

Source: AmInvest Research - 30 Oct 2024