RHB Retail Research has pointed out that IJM Plantations’ (IJMP) operations will not be affected by the current Movement Control Order (MCO).
The plantation’s Sabah operations were also not affected by the lockdown, as the company’s estate and mills do not fall under the six restricted districts.
“There have been a slight disruption with regards to logistics, as Sabah private jetties are now not allowed to operate under MCO guidelines,” the research house said.
For FY21, IHMP is guiding for a 4 to 5 percent FFB growth, on the back of higher yields in Indonesia.
Despite costs such as fertiliser application, minimum wage and changes in social security coverage are expected to rise, the research house believes that overall unit cost should stay relatively flat next year, as higher yields and cost-saving initiatives would offset an increase.
In its trading notes today, RHB Retail Research also pointed out that given recent weakness in MYR and IDR, there is a likelihood that IJMP may be again not included in the Shariah-compliant list.
“We adjust our FY20-22 earnings downwards by 5-8 percent after taking into account the latest FY20 production statistics as released by the Bursa and after adjusting downwards our FFB growth projections for FY21-22,”
“Buy with higher MYR1.60 TP from an unchanged 20x P/E, after rolling forward our valuation to FY21 (from CY20),” the research house added.
