PublicInvest sees TDM earnings double this year

TDM was also on track to open its new 130-bed Kuala Terengganu Specialist Hospital by October 2016,

KUALA LUMPUR: PublicInvest Research expects TDM Bhd to nearly double its earnings this year, banking on the stronger crude palm oil (CPO) prices and fresh fruit bunches (FFB) production growth of between 3% and 5%. 

The research house said the palm oil plantation and healthcare company was trading at an undemanding 13 times price-to-earnings ratio (PER), which was not justifiable given its strong earnings outlook, while also trading at a 29% discount to its net asset per share of RM0.95. 

“Further re-rating could come when the company lists its healthcare unit,” it said in a note on Thursday.

 PublicInvest Research added TDM is set to complete the construction of its first 60 tonne per hour mill in Kalimantan by end-2016. 

The group, it said, will source a majority of the FFB supplies through external purchases given the minimal FFB production from its own estates. 

The research house said TDM was also on track to open its new 130-bed Kuala Terengganu Specialist Hospital by October 2016, raising its total hospital beds to 427 from the existing 297 beds. 

“It also plans to expand its Kelana Jaya Medical Centre and TDMC Hospital with an additional of 8 and 27 beds respectively,” it said.

PublicInvest Research maintained its Outperform call on the stock with a higher target price of 85 sen.

“Despite weaker FFB production across the industry, TDM has been growing as its plantation area is less affected by the extreme dry weather condition. 

“Riding on the FFB growth coupled with stronger CPO prices, we expect TDM to deliver a good performance this year,” it said.