- Maintain BUY on Kulim for its special dividend of 82 sen
to 93 sen/share. We believe that there is one more leg up to Kulim’s share
price.
- We reckon that Kulim’s special dividend would be paid by end-January
2013 or early-February 2013 assuming that the High Court takes two months to
approve QSR’s and KFC’s capital repayment exercises.
- Kulim’s 9MFY12 results were below consensus estimates and
our expectations. While the group’s operations
in Malaysia improved on a quarterly basis in 3QFY12, Kulim’s 49%-owned
associate, New Britain Palm Oil Ltd (NBPOL) chalked up lower profits as FFB
output tapered off.
- Kulim’s average CPO price realised of RM3,093/tonne for 9MFY12
was close to our assumption. Nevertheless, we have revised our CPO price
assumption downwards to RM2,900/tonne to account for the fall in prices in
4QFY12.
- Kulim’s plantation EBIT almost tripled from RM25.7mil in 2QFY12
to RM66.4mil in 3QFY12. EBIT margin expanded from 12.1% in 2QFY12 to 36.1% in
3QFY12.
- We believe that the enhancement in margins was driven by a
60% QoQ jump in FFB production in 3QFY12. This helped compensate for a 4% QoQ
decline in average CPO price in 3QFY12.
- NBPOL’s FFB processed amounted to roughly 522,493 tonnes
in 3QFY12, 16% lower than 625,594 tonnes in 2QFY12. NBPOL’s FFB output fell 9%
in 9MFY12 versus 9MFY11 as heavy rains affected harvesting of fruits at the start
of the year.
- NBPOL also faced higher operating costs from the appreciation
of the Papua New Guinea Kina against the US$.
- As at mid-November 2012, NBPOL had sold forward 95,000 tonnes
of CPO for an average price of US$962/tonne or RM2,934/tonne.
- NBPOL had also sold forward 40,000 tonnes of CPO into FY13F
for an average price of US$913/tonne or RM2,785/tonne.
- Kulim’s shipping division recorded an improved EBIT of RM22.7mil
in 3QFY12 versus RM10mil in 2QFY12. As for fast food, the division’s earnings
climbed 15.1% QoQ to RM67.9mil in 3QFY12. However on a YoY basis, EBIT of the fast
food division inched down 3.6% due to higher operating expenses.
Source: AmeSecurities
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