HSPLANT (5138) CIMB maintains Hold on Hap Seng
KUALA LUMPUR: CIMB Research has maintained its Hold call on Hap Seng Plantations with a target price of RM2.46 due to the group's attractive dividend yield (4%), strong net cash position (RM183mil) and undervalued plantation assets.
"At the current share price, the implied EV/ha for its estates is only RM53,091, which is below the market price of RM70,000-RM80,000 per ha for the estates in Sabah," it said.
CIMB added that Hap Seng Plantations' 3Q14 core net profit fell 23% on-year due mainly to lower CPO selling prices.
"We cut our net profit forecasts for FY14 by 5% and fine tune our estimates for FY15-16 by less than 1% to reflect higher costs in 3Q14.
"Our target price, which is based on a 10% discount to its historical average of 13.5 times FY15 P/E to reflect the weaker CPO price prospects, remains intact. The stock stays a Hold as we see strong share price support from its decent dividend yield and cheap assets," it said.
CIMB said Hap Seng explained that this was due to higher manuring and field costs due to the increase in harvesting rates and labour mobilisation costs.
"The group's FFB output grew by 6.8% in 9M14, in line with Sabah's FFB output growth of 6% due to better FFB yields, but we project slower output growth in 4Q. We expect the group to deliver a better 4Q on the back of lower operating costs and slightly better ASPs for its palm products," it said.
The group indicated that it expects CPO prices to remain rangebound at the current level for the rest of the year.
"It is positive on the higher biodiesel mandate in Malaysia and slower palm oil output growth in 4Q but these are offset by higher US soybean output," CIMB added.
http://www.thestar.com.my
KUALA LUMPUR: CIMB Research has maintained its Hold call on Hap Seng Plantations with a target price of RM2.46 due to the group's attractive dividend yield (4%), strong net cash position (RM183mil) and undervalued plantation assets.
"At the current share price, the implied EV/ha for its estates is only RM53,091, which is below the market price of RM70,000-RM80,000 per ha for the estates in Sabah," it said.
CIMB added that Hap Seng Plantations' 3Q14 core net profit fell 23% on-year due mainly to lower CPO selling prices.
"We cut our net profit forecasts for FY14 by 5% and fine tune our estimates for FY15-16 by less than 1% to reflect higher costs in 3Q14.
"Our target price, which is based on a 10% discount to its historical average of 13.5 times FY15 P/E to reflect the weaker CPO price prospects, remains intact. The stock stays a Hold as we see strong share price support from its decent dividend yield and cheap assets," it said.
CIMB said Hap Seng explained that this was due to higher manuring and field costs due to the increase in harvesting rates and labour mobilisation costs.
"The group's FFB output grew by 6.8% in 9M14, in line with Sabah's FFB output growth of 6% due to better FFB yields, but we project slower output growth in 4Q. We expect the group to deliver a better 4Q on the back of lower operating costs and slightly better ASPs for its palm products," it said.
The group indicated that it expects CPO prices to remain rangebound at the current level for the rest of the year.
"It is positive on the higher biodiesel mandate in Malaysia and slower palm oil output growth in 4Q but these are offset by higher US soybean output," CIMB added.
http://www.thestar.com.my
