We are maintaining our Buy call on IJM Plantations but lower our FV to RM3.63, which still offers a decent potential upside. We are paring down our forecasts despite the stronger recovery in the group’s production, almost all of which is attributed to its Sabah unit. The stock is inexpensive at around USD17k per planted hectare and a PE of 12.6x FY14.
Sharp q-o-q improvement. IJMP’s core earnings in the September quarter surged 37.4% q-o-q on the back of a 48.2% rise in FFB production, although this was offset by a 9.1% decline in realized CPO price. This brought its 1H core earnings to RM66.0m, which missed our expectation of full-year earnings of RM204.7m.
Shortfall narrows. The much stronger September quarter performance helped to narrow the deficit against our forecast but is still insufficient. We expect the quarter ended December to be stronger in terms of production, which should partially mitigate reducing our FY14 to RM189.2m.
Sharp q-o-q improvement. IJMP’s core earnings in the September quarter surged 37.4% q-o-q on the back of a 48.2% rise in FFB production, although this was offset by a 9.1% decline in realized CPO price. This brought its 1H core earnings to RM66.0m, which missed our expectation of full-year earnings of RM204.7m.
Shortfall narrows. The much stronger September quarter performance helped to narrow the deficit against our forecast but is still insufficient. We expect the quarter ended December to be stronger in terms of production, which should partially mitigate reducing our FY14 to RM189.2m.
FV lowered. In view of the lower profit forecasts, we are adjusting our FV to RM3.63, which is based on 16x CY13 earnings. We find IJMP still offering a decent upside from the current price level and hence maintain our Buy call.
Source: OSK
No comments:
Post a Comment