PETALING JAYA: Kim Loong Resources Bhd
expects a 15% increase in the harvest of oil palm fresh fruit bunches (FFB) for its financial year ending on Jan 31, 2024 (FY24) compared with FY23.
TA Research stated Kim Loong’s management attributed the expected increase to the maturity of more replanted areas and an improved age profile of young palms in productive areas.
“For the palm oil milling operations, the total processing quantity is expected to be at least 1.5 million tonnes of FFB for FY24,” the research house said in a recent report on the planter.
As for the price of crude palm oil (CPO), Kim Loong warned it would likely be highly unpredictable. However, the average CPO price will likely stay above RM3,800 per tonne for FY24.
Kim Loong’s results for the third quarter ended Oct 31, 2023 (3Q24) surpassed TA Research’s expectations, primarily attributed to higher-than-expected profit margins.
Stripping out exceptional items, the company’s core net profit increased by 31.5% year-on-year (y-o-y) to RM47.2mil on the back of an 11.5% rise in revenue.
Cumulatively, for the first nine months ended Oct 31, 2023 (9M24), core earnings fell 2.2% y-o-y to RM75.2mil in tandem with a 21.4% plunge in revenue.
For the company’s plantation segment, despite robust 19.5% growth in FFB production, the operating profit for 9M24 declined by 20.5% y-o-y to RM92.4mil.
The weak results were primarily influenced by a lower FFB selling price, which dropped by 27.3% y-o-y to an average of RM718 per tonne.
Meanwhile, in the palm-oil milling segment, despite a 21.3% y-o-y decrease in revenue, the operating profit for 9M24 increased by 13.4% y-o-y to RM92.5mil, thanks to improved processing margins.
The average CPO selling price experienced a 26.8% y-o-y decline to RM3,853 per tonne.
The group declared a special single-tier dividend of three sen per share for the quarter under review.
TA Research tweaked its FY24 and FY25 earnings forecast higher for Kim Loong by 14.4% and 16.5% respectively, after factoring in the better-than-expected 3Q24 and margins. The research house also introduced its FY26 earnings forecast of RM130.2mil for the company.
The research outfit has upgraded Kim Loong to a “buy” call from “hold” and raised the target price on the stock to RM2.23 per share from RM1.95 previously.
