PETALING JAYA: Kenanga Research has upgraded its call for United Malacca Bhd
to “outperform” from “market perform”, based on the steady performance of its Indonesian operations.
In a note, the research firm said the Indonesian operations’ fresh fruit bunch (FFB) output had grown 69% year-on-year (y-o-y) due to an expansion in matured areas as well as a 52% jump in FFB yield as its Kalimantan estates grew into a more productive age profile.
In its third quarter ending Jan 31, 2024 (3Q24), the group registered a net profit of RM19.3mil, an increase of 19% quarter-on-quarter (q-o-q) as earnings before interest and tax margin improved 16% to 20% due to continual improvement in its Indonesian harvest.
Kenanga Research said despite the second quarter being the most profitable for the group, a 10% q-o-q uptick in FFB output from Indonesia offset the weaker Malaysian harvest, thus easing unit costs and lifted margins.
“After just breaking even in its second quarter, the Indonesia operations reported a pre-tax profit of RM3.3mil for 3Q24. Its net debt also dropped to RM17mil from RM31mil, or 2% net gearing,” it noted.
The research firm added that the group’s net profit, excluding foreign exchange losses of RM6.7mil and RM1.5mil in fair value gains, respectively, for the first nine months had exceed expectations at 89% and 90% of its full-year forecast and full-year consensus estimate.
