Kuala Lumpur Kepong Bhd
(May 21, RM22.56)
Maintain “hold” with a lower target price (TP) of RM22.37 from RM23.37: Kuala Lumpur Kepong Bhd’s (KLK) first half of financial year 2015 (1HFY15) net earnings of RM436.7 million was below ours and consensus’ expectations, making up 37% and 43% of full-year forecasts, respectively.
Its 1HFY15 net profit was 28% lower year-on-year (y-o-y). This was largely attributed to the weaker crude palm oil (CPO) prices averaging at RM2,170 per tonne (a drop of 9.3% y-o-y) and rubber prices averaging at RM6.75 per kg (a drop of 20.5% y-o-y), coupled with reduced crops and higher production cost of CPO. Furthermore, its manufacturing division dipped 57.8% y-o-y as the weak oil price affected the fatty alcohol and oleochemical businesses. Nonetheless, higher profit recognition was seen from Bandar Seri Coalfields and some land sales as the division doubled y-o-y.
However, quarter-on-quarter (q-o-q) net profit improved slightly by 4%. The plantation division registered lower profits (a decrease of 34.8% q-o-q), but this was offset by stronger earnings from its manufacturing division as it saw a recovery of the fatty alcohol business. Its property division also improved with its Bandar Seri Coalfields development.
An interim dividend of 15 sen was declared, which is in line with last year’s dividend per share.
Given the lacklustre results, we cut our earnings forecast by 18% and 13% for FY15 and FY16 respectively as we adjust for lower crop production and manufacturing margin as we earlier expected a lower production cost.
Hence, we lower our TP to RM22.37 from RM23.37 based on an unchanged price-to-earnings ratio of 21 times but roll over to FY16 earnings per share estimates. Maintain “hold”. — BIMB Securities Sdn Bhd, May 21.
http://www.theedgemarkets.com
(May 21, RM22.56)
Maintain “hold” with a lower target price (TP) of RM22.37 from RM23.37: Kuala Lumpur Kepong Bhd’s (KLK) first half of financial year 2015 (1HFY15) net earnings of RM436.7 million was below ours and consensus’ expectations, making up 37% and 43% of full-year forecasts, respectively.
Its 1HFY15 net profit was 28% lower year-on-year (y-o-y). This was largely attributed to the weaker crude palm oil (CPO) prices averaging at RM2,170 per tonne (a drop of 9.3% y-o-y) and rubber prices averaging at RM6.75 per kg (a drop of 20.5% y-o-y), coupled with reduced crops and higher production cost of CPO. Furthermore, its manufacturing division dipped 57.8% y-o-y as the weak oil price affected the fatty alcohol and oleochemical businesses. Nonetheless, higher profit recognition was seen from Bandar Seri Coalfields and some land sales as the division doubled y-o-y.
However, quarter-on-quarter (q-o-q) net profit improved slightly by 4%. The plantation division registered lower profits (a decrease of 34.8% q-o-q), but this was offset by stronger earnings from its manufacturing division as it saw a recovery of the fatty alcohol business. Its property division also improved with its Bandar Seri Coalfields development.
An interim dividend of 15 sen was declared, which is in line with last year’s dividend per share.
Given the lacklustre results, we cut our earnings forecast by 18% and 13% for FY15 and FY16 respectively as we adjust for lower crop production and manufacturing margin as we earlier expected a lower production cost.
Hence, we lower our TP to RM22.37 from RM23.37 based on an unchanged price-to-earnings ratio of 21 times but roll over to FY16 earnings per share estimates. Maintain “hold”. — BIMB Securities Sdn Bhd, May 21.
http://www.theedgemarkets.com
