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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