- Reiterate BUY on IJM Plantations Bhd (IJMP) with an unchanged
fair value of RM3.65/share. Rolling forward the basis of our valuation to
FY14F, our fair value of RM3.65/share for IJMP implies a PE of 15.4x on FY14F EPS.
- IJMP’s seven-year PE band ranged from a low of 6x to a high
of 28x. The group’s average PE was 18x in the past seven years.
- Excluding an impairment loss of RM11mil and unrealised forex
loss of RM7.2mil, IJMP’s FY12 results were within our expectations and
consensus estimates.
- In line with the earnings trend recorded by other
plantation companies, IJMP’s net profit was fell YoY and QoQ in 4QFY12.
- Compared to 4QFY11, IJMP’s operating profit shrank 51.6%
in 4QFY12 due to higher field upkeep maintenance activities. We reckon that the
group was dragged by increases in the cost and volume of fertiliser application
in 4QFY12.
- Against other plantation companies, the YoY decline in IJMP’s
average CPO price realised in 4QFY12 was not as sharp. This was because IJMP
had sold forward some of its CPO production at low prices in 4QFY11.
- As such, average CPO price realised only eased by 3% from
RM3,224/tonne in 4QFY11 to RM3,128/tonne in 4QFY12.
- IJMP’s revenue rose 16.6% from RM506.3mil in FY11 to RM590.4mil
in FY12. Turnover growth was driven by expansion in CPO prices and production.
IJMP also enjoyed maiden contributions from Indonesia.
- In FY12, IJMP harvested its maiden crop of 21,979 tonnes of
FFB in Indonesia.
- FFB production in Malaysia climbed 12.8% YoY to 648,853 tonnes
in FY12 after a negative growth of 4.9% in FY11. Recall that IJMP’s FFB output
was affected by unfavourable weather in FY11.
- Average CPO price realised was RM3,049/tonne in FY12 compared
with RM2,760/tonne in FY11.
- IJMP has declared a gross DPS of 10 sen for FY12, which implies
a yield of 3.3% and payout of 51%. Moving forward, we have forecast a gross DPS
of 12 sen for FY13F, which translates into a decent yield of 4%.
Source: AmeSecurities
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