IOI earnings to remains strong in 2H, says Kenanga

KUALA LUMPUR: Kenanga Research expects IOI Corp Bhd's earnings in the second half of its financial year to remain strong despite the seasonally weaker production.

"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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Kenanga Investment Bank Research , IOI , CPO , FFB


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