Genting Plantations 1HFY22 normalised earnings surged by +87%yoy to RM353.6m with a higher PBT achieved of RM515.7m. This was primarily fueled by the stronger palm product prices realised despite having a low FFB production and sales volume of refined products.
Improvement in earnings was also driven by a lower net OPEX ratio following GenP effective cost management during the quarter which saw EBITDA margin rise 11ppt-yoy. The net earnings came in above our expectations making up 62% of the full-year estimate however within consensus estimates at 54%. FFB production. On a year-to-date basis, FFB production declined by – 4%yoy to 930,000/mt impacted by mixed weather patterns in Northern and Southern Peninsular, wet weather conditions in Sabah as well as continued high rainfall in Central Kalimantan. This has resulted in disruption in harvesting activities and FFB & CPO evacuation process.
The 2QFY22 plantation profit continues to increase by +48%yoy to RM369 m backed by higher ASP of CPO RM4,907/mt (+51%yoy) and PK RM3,484/mt (+46%yoy) realised. Meanwhile, its downstream manufacturing segment profit jumped +100%yoy higher to RM23.6m as management limited its sales to contracts with higher margin contracts only.
MIDF maintains its forward year earnings while tweaking the FY22 bottom-line higher to RM612.3m, as it revisits the total production, assumptions on margins, and blended cost to be more reflective of forward anticipations. Dividend. A first interim DPS of 15sen was declared, implying 2.3% dividend yield.
The research house maintains a BUY call with TP of RM8.00 by pegging its FY23 EPS of 52.7sen to PER of 15x.
