Friday, 1 March 2013

Sarawak Oil Palms - A Light At The End Of The Tunnel?

SOP’s FY12 earnings of RM158.5m (-34.8% y-o-y) was marginally within our forecast but missed consensus’ amid weaker CPO prices (-18% y-o-y), against the backdrop of a challenging operating environment for Malaysian refiners in 9MFY12 and weak production  in  1HFY12.  FFB  output,  nonetheless,  increased  by  5.2%  in  2012.  Our expectations  are  for  production  to  increase  by  15.5%  and  14.5%  in  FY13  and  FY14 respectively. Our forecasts are unchanged and we reiterate BUY with FV of RM6.77.
Within  expectations.  SOP  registered  4QFY12  revenue  of  RM376.6m  (+19.8%  y-o-y,  -10.5%  q-o-q)  and  earnings  of  RM24.3m  (-42.2%  y-o-y,  -40.2%  q-o-q)  as  its  20.0%  y-o-y FFB production growth was unable to offset the steep 31.7% y-o-y decline in realized CPO prices.  Revenue  and  net  profit  for  FY12  clocked  in  at  RM1,307.7m  (+12.1%  y-o-y)  and RM158.5m  (-34.8%  y-o-y),  against  a  backdrop  of  a  challenging  refining  environment, a 18.2% y-o-y drop in realized CPO prices and weak output in 1HFY12.  Refining margins in East  Malaysia  significantly  improved  in  4QFY12  following  a  dismal  9MFY12  dotted  with
instances  of  negative  margins.  Some  industry  players  suggested  that  refining  margins were as wide as RM100 per tonne during the quarter, if some forward sales were also in place. FY12’s earnings were marginally within our expectations but missed consensus’, representing 95.2% and 87.1% of our and consensus estimates.

Source: OSK

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