Top Story :
KLK – Benefitting from its young age profile Outperform Visit Note
♦ Six key points:
1) Strong FFB growth so far in FY09/10, but this may moderate if affected by El Nino;
2) Better CPO prices to come in next few quarters as we believe KLK has already sold some of its FY10 production forward earlier, at more attractive prices;
3) No labour shortage problems yet, although this may materialise in the medium term, once labour permits start expiring;
4) Delay in new methyl ester sulfonate plant completion by 6-9 months to either 3Q/4Q FY09/10;
5) Good news from the retail division - coming from lower provisions to be made for its US store closures, and from the property division - coming from approval to start development for a new township development; and
6) Higher new land planting targets of 15,000ha p.a. (from 10,000ha)
♦ All in, we revised our forecasts down by 7.1% for FY10, 1.5% for FY11 and 18.7% for FY12.
♦ Post-earnings revision, we lower our SOP-based fair value for KLK to RM18.40 (from RM19.50) and maintain our Outperform rating. We continue to like KLK for its inexpensive valuations (as it remains the cheapest amongst the big-cap plantation stocks currently) and for its strong management with a good track record. Further catalysts could come from better-than-expected FFB production growth as well as potential return to profitability of the retail division.
RHB Equity 360°( Infra, Plantation, Insurance, Gamuda, Tanjong, SapCrest, Jaya Tiasa; Technical:TDC) - 24/0...
No comments:
Post a Comment