IOI Corp set to see double-digit growth


PETALING JAYA: Fresh fruit bunch (FFB) production growth for IOI Corp Bhd is projected to be flattish in financial year 2021 (FY21).

Despite this, PublicInvest Research said it forecasts double-digit earnings growth for the plantation company, which should be backed by “encouraging performance from the upstream plantation and oleochemical business”.

“Margins for the refinery segment are expected to remain depressed partly due to the suspension of crude palm oil (CPO) export duty.

“Nevertheless, we believe it is still profitable at this juncture due to the considerable gap between palm olein and CPO prices.

“As for the oleochemical segment, despite the surge in CPO prices, the margins were holding up as the prices of palm kernel, which is their main feedstock, did not move in tandem with the CPO prices,” it said in a note to clients yesterday.

Meanwhile, the surge in demand for the personal hygiene and pharmaceutical products due to the concern over Covid-19 has helped to bolster oleochemical sales. However, despite a forecast 7.2% FFB production growth for the first two months of FY21, full-year growth is expected to be flat or slightly lower due to the aggressive replanting programme carried out by the plantation company.

This will be offset by the increased crop production from its young plantation in Indonesia.

PublicInvest noted that the group has been accelerating its replanting programme since last year, which saw over 10,000ha of aging oil palm trees in Sabah being replanted in FY20. It added that IOI Corp was looking to replant up to 12,000ha.

PublicInvest maintains its RM4.80 target price on IOI Corp and has a neutral call on the stock.
Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 18
Cxense type: free
User access status: 3

IOI Corp Bhd ,

   

Did you find this article insightful?

Yes
No

Next In Business News

Sony to shut Penang factory, consolidate facilities
CPO futures likely to consolidate next week with bouts of profit taking
Billionaire Buffetts Brooks grows as pandemic spurs more running
Ant, Grab's venture and Sea to usher in Singapore digital banking
Blast-rocked Petronas owned refinery, fire extinguished, shut down for investigations
Oil rises to just US$50/bbl on hopes for US stimulus
Wall Street's main indexes hit all time high
Is it time to switch to cyclical stocks?
Can glove makers maintain their performance?
Short Position - Tropicana’s glove share buy

Stories You'll Enjoy