Higher palm oil prices augur well for Kim Loong


PETALING JAYA: Following record earnings in the second quarter ended July 31, 2022 (2Q), Kim Loong Resources Bhd expects a better financial year 2023 (FY23) on the back of higher palm oil prices and improving fresh fruit bunch (FFB) production.

The plantation company posted a net profit of RM49.7mil in 2Q, driven by the higher average selling prices of FFB and crude palm oil (CPO). Cumulatively, its first-half (1H) profit surged 37.8% year-on-year to RM88.9mil.

Having conducted a briefing with Kim Loong recently, TA Research said its management expects FFB production to increase by around 10% to 291,000 tonnes in FY23.

This will be supported by yield recovery, contribution from new mature areas and freshly acquired land.

According to the research firm, the plantation company also expects the cost of production to trend lower in 2H of FY23.

However, it was still facing a labour shortage of about 10% to 20% of requirement, resulting in harvesting time being extended to around 30 days from 15 days normally.

It noted that the cost of production (ex-mill) in 1H had increased to RM2,370 per tonne versus FY22’s RM1,670 per tonne.

This was due to the minimum wage hike; lower FFB yield; higher fertiliser cost and the higher windfall levy it had to absorb.

Meanwhile, Kim Loong is still actively looking to set up a palm oil mill in Sarawak to support its plantation operations.

Currently, the FFB produced from its estates is sold to a third-party mill. With its own palm oil mill, Kim Loong’s gross profit margin is expected to improve and contribute positively to the bottomline, said TA Research.

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Kim Loong , palm oil , FFB , CPO

   

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