Period 3Q12 and 9M12.
Actual vs. Expectations The 9M12 core net profit* of RM55m was
within both the consensus and our estimates. Although the results made up 78%
of the consensus forecast of RM71m and 87% of our forecast of RM63m, we believe
that its 4Q12 numbers should be weaker in line with the lower CPO prices. Note that
the 4Q12 average CPO price so far is at RM2266/mt or 21% lower than the
RM2851/mt in 3Q12.
Dividends No dividend was announced as expected.
Key Results Highlights YoY, the 9M12 core net profit tumbled 57%
YoY to RM55m as the timber division PBT tumbled 97% YoY to RM1.2m while the
plantation division PBT declined 41% YoY to RM74m. The timber division is
facing a difficult time as the loss in its plywood processing business is
dragging down the profits made by selling export logs. For its plantation
division, the 9M12 FFB ASP declined 13% YoY while the production cost is
estimated to have increased by 20% YoY possibly due to higher labour and
fertiliser costs.
QoQ, the 3Q12 core net profit jumped 117% to RM30m as FFB
volume surged 62% to 162,806mt. This was more than enough to offset the lower
CPO price achieved of RM2993/mt (-7% QoQ). The timber division meanwhile succumbed
to its first loss in 2 years with a loss before tax of RM0.7m in 3Q12, causing
9M12 PBT to decline to RM1.2m (6M12 PBT: RM1.9m).
Outlook The overall outlook for the timber division
is still negative. In 3Q12, the average export logs price of US$206/m3 and
plywood price of US$546/m3 were both lower by 18% YoY. The plantation division
was affected by the lower CPO prices ASP at RM2993/mt (-7% YoY) in 3Q12. These conditions
are expected to persist in 4Q12.
Change to Forecasts Maintain
FY12-13E net profit of RM63m-RM94m.
Rating Maintain UNDERPERFORM
The much lower FY12E earnings at RM63m (-62% YoY) should
keep share price depressed.
Valuation Maintain our TP of RM3.40 based on
unchanged 13.4x Forward PER on FY13E EPS of 25.5 sen.
Risks Better
than expected timber products and CPO prices.
Source: Kenanga
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