Maybank Research says floods have small impact on palm oil sector


PETALING JAYA: Around 6.34% or 23,730ha of Felda Global Ventures Holdings Bhd’s (FGV) total estates were affected by the recent floods, with opportunity loss for its fresh fruit bunches production estimated at 11,000 tonnes, said Maybank IB Research.

Its research head Wong Chew Hann, who maintained its earnings forecasts and “hold” call on FGV, said that this estimated FFB production opportunity loss represented 0.2% of the forecast annual production.

“The estimated flood damages (including repair costs) and opportunity losses due to the floods are RM21mil as at Dec 29, or 4% of our financial year 2015 net profit forecast of RM527mil,” she said in a note yesterday.

Wong said any impact of the floods on the palm oil sector would be small as 2.7% and 3.2% of total planted areas in 2013 came from Kelantan and Terengganu respectively.

Additionally, she said that 1.5% and 2.5% of crude palm oil production from January to November 2014 came from Kelantan and Terengganu respectively.

Besides FGV, she said the other listed companies it covered did not have exposure in Kelantan and Terengganu except for TH Plantations Bhd (less than 6% of its total landbank), Kuala Lumpur Kepong Bhd (less than 4%) and Boustead Plantations Bhd (less than 3%).

She said TDM Bhd, which was not under its coverage, had 74% of its 2013 total planted oil palm area in Terengganu.

Wong said a quick scan of listed companies under its coverage showed that none of them should be materially affected by the floods.

“No auto assemblers/producers, glove producers or oil and gas fabricators under our coverage have plants, factories or yards in Kelantan and Terengganu,” she said.

Maintaining earnings forecasts and “buy” call on Tenaga Nasional Bhd, Wong said its electricity sales in Kelantan, Terengganu and Pahang account for less than 10% of total sales.

She said every 10% impact on sales in these three states for a 10-day block lowered its revenue by RM118mil or 1.1% of its net profit for its financial year ending August 2015.

“Its assets are mostly insured since floods are an annual recurrence,” she said.

As for banks and consumer-retailers, Wong said they would see some economic loss as floods had disrupted operations and banks would defer loan instalments for flood victims.

She also estimated that the reconstruction of homes and restoration of public infrastructure like hospitals, schools, roads and bridges, as well as cash handouts to victims could range from RM500mil to over RM1bil.


   

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