- Based on the current share price of RM5.19, Kulim’s
exprice after the special dividend would be about RM4.26 to RM4.37. This would
value Kulim at FY13F PEs of 13.6x to 13.9x (excluding fast food earnings),
which are undemanding.
- Kulim’s 1HFY12 results were in line with expectations but below
consensus estimates. Kulim’s core net profit
fell 51.9% YoY to RM129.5mil in 1HFY12 due to low palm oil production
and higher costs.
- NBPOL’s (New Britain Palm Oil Ltd) FFB processed fell 5.6%
YoY to 1.2mil tonnes in 1HFY12 due to torrential rains, which affected
harvesting in 1QFY12. Although FFB production had improved in 2QFY12, this was
not enough to compensate for the deficit in 1QFY12.
- Due to the dilution in Kulim’s shareholding in NBPOL from 50.68%
to 48.97%, Kulim commenced equity-accounting for NBPOL’s net profits from
2QFY12 onwards. NBPOL accounted for 28% of Kulim’s pre-tax profit in 2QFY12.
- The silver lining is that NBPOL has locked-in to sell
about 105,000 tonnes of its CPO production at US$1,092/tonne (RM3,440/tonne).
This is about 15% of NBPOL’s estimated FY12F production.
- Kulim’s FFB production in Malaysia fell 8.3% YoY to 259,782
tonnes in 1HFY12 due to the lag impact of the drought in early-2010.
- However, we expect FFB production to recover in 2HFY12. Kulim’s
internal FFB output in July 2012 expanded 25% from June’s 54,129 tonnes.
- Due to a 15% to 20% YoY climb in production costs in 1HFY12,
Kulim’s plantation EBIT margin (Malaysia only) shrank from 26.9% in 1HFY11 to
18% in 1HFY12.
- We anticipate margin enhancements in 2HFY12, underpinned
by expansions in palm oil production, which should lower production costs.
Kulim’s production cost in Malaysia was about RM1,500/tonne in 1HFY12.
Source: AmeSecurities
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