PETALING JAYA: Kim Loong Resources Bhd
is projected to achieve a minimum of 5% higher fresh fruit bunch (FFB) production for its financial year 2025 (FY25).
This was based on a better age profile of young palm productive areas and its ongoing replanting programme.
The group targets to replant about 1,000ha in FY25, according to TA Research. Meanwhile, for the palm oil milling operations, the total processing quantity is expected to be around 1.6 million tonnes of FFB for FY25.
Management expects the average crude palm oil (CPO) price to stay around RM4,000 per tonne in FY25, added the research firm.
Kim Loong registered a 15% growth in FFB production in FY24.
The research house said the group’s fourth quarter (4Q24) results came in within expectations.
“Stripping out exceptional items, Kim Loong’s core net profit plunged 28.6% year-on-year (y-o-y) to RM26.3mil on the back of 15.4% drop in revenue. The weaker earnings were mainly attributable to lower palm oil prices and lower processing throughput and oil extraction rate at milling operations,” it added.
Cumulatively, FY24 core earnings fell 8.2% y-o-y to RM148.7mil amid a 20% drop in revenue.
Going forward, the research house has tweaked its FY25 and FY26 earnings forecast higher by 12.7% and 17.7% respectively, after factoring in higher FFB growth assumptions to be in line with management guidance.
It has also raised the stock’s target price to RM2.50 from RM2.23 post earnings adjustments and roll-forward of valuation base year to 2025 with unchanged price earnings of 16 times.
“Upgrade to ‘buy’ from ‘hold’ due to the attractive valuation.”
Meanwhile, Apex Research is maintaining its “hold” call for Kim Loong but with a revised target price of RM2.05, from RM1.84 previously.
Although it maintained a positive outlook for the group’s earnings growth potential especially with the contribution from its biogas plant, the research house said the stock is currently priced fairly.
“For 2024, we anticipate further strengthening of CPO prices averaging at RM4,000 a tonne,” it added.
