THP’s FY12 core earnings of RM65.3m (-47.7% y-o-y) missed expectations as the steep decline in realized CPO prices (-14.1% y-o-y) overshadowed production growth. The company will see strong output growth over the next few years following its recent purchase of planted areas, driven by both external and organic growth. We raise our FY13-FY14 earnings forecasts by 33% to 46% but tweak our FY13-FY14 EPS estimates by -5% to +4% on incorporating the issuance of new shares following the purchase. Maintain NEUTRAL, with FV of RM2.12.
Missing estimates. TH Plantations (THP) registered 4QFY12 revenue of RM99.1m (-24.4% y-o-y, +20.4% q-o-q) and core earnings ofRM18.4m (-51.3% y-o-y, -4.4% q-o-q) as production growth was unable to offset the steep decline in CPO prices. The company experienced 18.0% y-o-y FFB production growth for the quarter while realized CPO prices fell at a sharper 29.4% y-o-y rate. Headline 4Q net profit was RM104.4m (+176.8% y-o-y, +443.5% q-o-q) due to a RM101.2m net asset fair value surplus booked into the quarter’s earnings following the completion of an acquisition from Tabung Haji. Full year 2012 revenue and earnings of RM375.8m (-13.6% y-o-y) and RM65.3m (-47.7% y-o-y) missed expectations, with bottomline reflecting just 82.2% and 86.7% of our and consensus estimates respectively.
Driven by external and organic growth. THP’s FFB production grew 50.6% y-o-y for the last two months of the year following the company’s acquisition of a planted area in East Malaysia measuring about 14,810 ha. As a result, FY12’s production grew by 6.1% y-o-y, also boosted by organic growth of 2.2%. We estimate FFB production to surge by 45.2% y-o-y in FY13, driven largely by external growth but also by organic growth of 7.8%. Following its rapid replanting initiative since 2007, THP has managed to inject young blood into its previously old tree age profile in its pre-acquisition planted areas. We expect a FY14 FFB production growth of 16.3% y-o-y, led mostly by a 22.9% output increase in its newly acquired estates.
Missing estimates. TH Plantations (THP) registered 4QFY12 revenue of RM99.1m (-24.4% y-o-y, +20.4% q-o-q) and core earnings ofRM18.4m (-51.3% y-o-y, -4.4% q-o-q) as production growth was unable to offset the steep decline in CPO prices. The company experienced 18.0% y-o-y FFB production growth for the quarter while realized CPO prices fell at a sharper 29.4% y-o-y rate. Headline 4Q net profit was RM104.4m (+176.8% y-o-y, +443.5% q-o-q) due to a RM101.2m net asset fair value surplus booked into the quarter’s earnings following the completion of an acquisition from Tabung Haji. Full year 2012 revenue and earnings of RM375.8m (-13.6% y-o-y) and RM65.3m (-47.7% y-o-y) missed expectations, with bottomline reflecting just 82.2% and 86.7% of our and consensus estimates respectively.
Driven by external and organic growth. THP’s FFB production grew 50.6% y-o-y for the last two months of the year following the company’s acquisition of a planted area in East Malaysia measuring about 14,810 ha. As a result, FY12’s production grew by 6.1% y-o-y, also boosted by organic growth of 2.2%. We estimate FFB production to surge by 45.2% y-o-y in FY13, driven largely by external growth but also by organic growth of 7.8%. Following its rapid replanting initiative since 2007, THP has managed to inject young blood into its previously old tree age profile in its pre-acquisition planted areas. We expect a FY14 FFB production growth of 16.3% y-o-y, led mostly by a 22.9% output increase in its newly acquired estates.
Maintain NEUTRAL. We are raising our FY13 and FY14 earnings forecasts by 32.9% and 46.1% respectively after incorporating contributions from the latest acquisition. However, we trim our EPS forecast by 5.3% for FY13 and nudge up the FY14 numbers by 4.1% following a sharp 40.4% increase in share outstanding as a result of the acquisition. We value THP at a FV of RM2.12, based on a 13.0x FY13 PER.
Source: OSK
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