Kenanga adjusts SDP outlook, price to stay firm


Kenanga Research has maintained SDP’s average crude palm oil price at RM4,000 per tonne for FY22 and RM3,500 for FY23, but is nudging up palm kernel prices by 18% and 8%, respectively. A larger-than-expected dividend payout cannot be ruled out either for FY22, Kenanga Research said.

PETALING JAYA: Kenanga Research has adjusted its financial year 2022 (FY22) to FY23 core earnings per share on Sime Darby Plantation Bhd (SDP) by 1% and 5%, respectively, on firm palm oil prices staying longer, but has maintained a “market perform” on the plantation stock with a target price of RM5.20.

The world’s supply of leading vegetable oils, palm and soybean is expected to pick up seasonally in the second half of calendar year 2022 (CY22), which in turn should exert some downward pressure on prices.

“However, palm oil prices are likely to stay relatively firm on the back of several supportive factors, namely, the tight worldwide edible oils and fat market, low palm oil inventories in China, India and Pakistan and the current high oil and gas prices,” it said in a note.

The research house has maintained SDP’s average crude palm oil price at RM4,000 per tonne for FY22 and RM3,500 for FY23, but is nudging up palm kernel prices by 18% and 8%, respectively.

A larger-than-expected dividend payout cannot be ruled out either for FY22, Kenanga Research said.

MIDF Research, which has a “buy” call on the company with a target price of RM5.50, believes palm oil demand will remain favourable due to uncertainties over the Russia-Ukraine prolonged war and subdued production outlook for soybean.

Maybank Investment Bank said the recent minimum wage hike in Malaysia is expected to increase SDP’s yearly cost by up to RM90mil per annum. It has a “hold” call on the stock with a target price of RM4.97.

Public Investment Bank said the hike would result in a cost of between RM80mil and RM90mil based on 24,000 workers. It is “neutral” on the stock with a target price of RM4.60.

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 46
Cxense type: free
User access status: 3
Join our Telegram channel to get our Evening Alerts and breaking news highlights
   

Next In Business News

OPEC boosts oil income in 2021, well completions drop
Garuda Indonesia halves debt with restructuring, on track for profit
Oil extends gains as major producers flag capacity limits
Stocks swing higher as China eases quarantine rules
Malaysia urges palm oil mills to resume production despite price drop
Selangor, Penang & Sabah emerged as top importers of wheat in May 2022
Rafidah stepping down as AirAsia X chairman
Malaysia's PPI continues to record high growth in May 2022
Bursa changes course to negative territory at midday
Moody's affirms AmBank's ratings, changes outlook to stable

Others Also Read