KUALA LUMPUR: Sime Darby Plantation is expected to deliver its best quarterly in the fourth quarter of 2020 on better crude palm oil (CPO) price, Maybank Investment Bank Research says.
It said on Tuesday the 9M20 core profit after tax and minority interest (PATMI) was within its, but above street estimates.
“Following our PATMI revisions, our new realised net asset value (RNAV) target price is RM5.24 (+1%) as we rolled forward our valuation year. At 39 times FY21E PER, Sime Plantation remains a Hold, ” it said.
Maybank Research said it heard the progress of its land disposals (initial target of more than RM1bil by end-2021) may be slower than previously guided due to Covid-19.
“We prefer KLK (Buy, TP: RM27) for Malaysian large cap exposure, ” it said.
On the 3Q results, it said that adjusted for unrealised forex loss (-RM26mil) and land disposal gain (+RM2mil), Sime Plantation’s 3Q20 core PATMI of RM208mil (+265% YoY, +34% QoQ) bringing 9M20 core PATMI to RM643mil (+307% YoY) which met 74%/98% of its/street full-year forecasts – within/ above expectations.
Had it not been for FV loss on biological assets of its Papua New Guinea sugar assets (-RM24mil) and impairment of its plantation assets (-RM17mil), its3Q results would have been even better.
The 3Q group upstream EBIT rose to RM273mil (+259% YoY; -14% QoQ) on higher CPO average selling price (+26% YoY, +6% QoQ).
Downstream EBIT improved too albeit marginally to RM71mil (+4% YoY, +196% QoQ) on better revenue.
Maybank Research recently revised up its 2020/2021 industry-wide CPO ASP forecasts to RM2,660 a tonne from RM2,400 and RM2,500 (RM2,400) respectively due to industry’s tight supply.
“Coupled with our output revisions, our FY20E core and headline EPS are revised by +5%/+7%. Our FY21-22E core EPS are revised up by +20%/+4% respectively, ” it said.
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