"Premised on higher CPO price so far, we expect earnings in 2HFY21 to remain strong," it said in a note, while reiterating its "outperform" recommendation on the stock.
The plantation player's 1HFY21 core net profit of RM542.4mil was deemed above Kenanga's and consensus expectations at 54% and 55%, in view of the higher 2HFY21 CPO prices.
However 1HFY21 fresh fruit bunch (FFB) output of 1.64 million metric tonnes was below its expectation at 51% versus a five-year average of 55%.
Kenanga raised its FY21-22 earnings estimate by 8% on higher FY21-22 CPO price of about RM2,900-RM2-950 per metric tonne but reduced FY21-22 FFB growth to flat and 2% respectively.
The research house has an unchanged target price of RM4.95 on the stock based on a rolled-ver FY22 price-earnings ration of 27x from 30x.
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