Thursday 31 May 2012

IJM Plantations Bhd - OUTPERFORM - 30 May 2012


Period    4Q12/12M12.

Actual vs.  Expectations
 At RM175.5m* or 93% of the consensus’ FY12E forecast of RM188m, IJMP result was broadly within the consensus expectations. However, it was lower than our expectation as it made up only 88% of our FY12E forecast of RM199m. We think that fertiliser cost has been higher than expected.

Dividends   Net dividend of 10.0 sen was announced. This was higher than our expectation of 8.0 sen as the payout ratio of 51% was higher than our anticipation of 40%.

Key highlights
 YoY, FY12 core earnings surged 21% due to higher CPO prices realised of RM3,049 per mt (+10% YoY) and higher FFB production of 649k mt (+13% YoY)

 YoY, 4Q12 core earnings declined 37%, possibly due to higher fertiliser prices and wage costs.

 QoQ, the earnings dropped by 69% due to a seasonally lower FFB production in 4Q12 of 119k mt (-30% QoQ).

Outlook   Fertiliser cost should normalise in 2H12 in line with lower crude oil prices so far in 2Q12. However, on a YoY basis, the fertiliser cost in FY12E will still be higher by 20%.

Change to Forecasts
 We have revised down our FY13-14E net profits each by 6% to RM199m-RM219m as we have assumed a higher fertilizer cost growth YoY of 20% (against 10% previously).

Rating  Maintain OUTPERFORM
 The long term growth prospect remains intact. Maturing Indonesia plantation will support a 5-year FFB CAGR of 7%-9% up to FY16E.

Valuation    We have lowered our target price by 6% to RM4.00 (previously RM4.25). Our valuation is based on an unchanged 16.0x Fwd. PER on the lower FY13E EPS of 24.9 sen (previously 26.6 sen).

Risks   Sustained decline in CPO prices.  

Source: Kenanga

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