Hap Seng posted a 3QFY20 core net profit of RM21.5mil, which brought 9MFY20 earnings to RM38.9il, which came to 68% and 88% of Kenanga's and consensus full-year estimates.
"We highlight here that our FY20-21E CNP is 30-44% higher than consensus and that earnings upgrades are likely to follow," said Kenanga.
It added that it expects the group to end the year with another strong set of results in 4QFY20 as higher CPO prices offset an expected industry-wide dip in production in Malaysia.
"Reiterate outperform with a higher TP of RM2.15 (from RM1.95) based on a higher FY21E PBV of 1.0x (from 0.90x), reflecting +0.5SD valuation.
"We find it hard to understand why HSPLANT is traded at FY21E PBV of 0.85x (c.35% discount to its closest peer), and FY21E PER of 19.5x (22% discount to closest peer)," it said.
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