KUALA LUMPUR: Kuala Lumpur Kepong Bhd
's core net profit of RM175.2mil in 1QFY19 came in broadly in line with expectations, said PublicInvest research.
It maintained its neutral recommendation with an unchanged target price of RM22.86.
In a research note today, PublicInvest said the results made up 21% but missed consensus expectations by 7%.
The core net profit for the quarter excluded a RM19.6mil provision for and write-off of inventories, RM22.4mil surplus on government acquisition of land, RM33.3mil foreign exchange gain and RM39mil gain on derivatives.
Year-on-year, plantations sales plummeted 58% to RM1.7bil due to a steep decline in palm oil product prices despite an increase i fresh fruit bunch (FFB) produciton by 7%.
Average recorded CPO price dropped 29% y-o-y to RM1,840/mt while average palm kernel price dipped from RM2,488/mt to RM1,375/mt.
Manufacturing sales declined 12.4% y-o-y to RM2.2bil on the back of weaker sales volume from China and European operations, which was partly cushioned by stronger Malaysian sales.
Property sales doubled to RM39.8mil, bolstered by ongoing project called Hemingway Residence in Bandar Sungai Buloh, which consists of superlink terrace houses and semi-detached homes.
"It expects to see CPO prices hovering around RM2,100-2,200/mt for the next three months," said PublicInvest on KL Kepong's outlook.
"On FFB production growth, management expects to see FFB production surpassing 4m mt level for
FY19 with an expected growth of 5-6%."
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