KLK positive on palm oil price rally

The plantation group noted revenue for the quarter was up 5.2% at RM4b against RM3.8b registered the year prior


KUALA Lumpur Kepong Bhd (KLK) is expecting better profits for the upcoming year on improved crude palm oil (CPO) prices, higher exports and tighter edible oil inventories, as it concluded the current year on a positive note.

The company saw its net profit rise 19.3% year-on-year (YoY) to RM208.82 million in its fourth quarter ended Sept 30, 2020 (4Q20), from RM175.02 million a year ago backed by favourable CPO and palm kernel selling prices during the period.

In an exchange filing yesterday, the plantation group noted revenue for the quarter was up 5.2% at RM4 billion against RM3.8 billion registered the year prior attributed to a sharp 83.8% YoY rise in turnover from its plantation segment.

The group’s plantation segment posted a 52.2% YoY increase in net profit to RM192.4 million from RM126.4 million in 4Q19, underpinned by improved prices.

Its property segment also saw a 63.2% jump in net profit to RM29.5 million from RM18.1 million a year ago, while net profit was up 24.8% to RM118.9 million from RM95.3 million for its manufacturing segment, supported by a higher unrealised gain arising from fair value changes on outstanding derivative contracts.

The group’s oleochemical division also gained a higher profit of RM118.8 million from RM94.6 million.

On a full-year basis, KLK saw its net profit surged 25.12% YoY to RM772.6 million from RM617.51 million last year, while revenue was up marginally to RM15.6 billion from RM15.53 billion.

KLK will recommend a final dividend for the financial year ended Sept 30, 2020 (FY20), at a later date.

It added that the total interim dividend paid for FY20 to date is a single-tier dividend of 15 sen per share.

In FY19, the group had paid an interim dividend of 15 sen per share and a final dividend of 35 sen per share.

Shares of KLK closed 1.39% or 32 sen higher to RM23.32 yesterday, valuing the group at RM25.21 billion.

Its parent Batu Kawan Bhd’s net profit slipped 12% YoY to RM85.17 million in the 4Q20 due to the unrealised loss under its plantation segment and foreign-exchange translation loss under its investment holdings segment.

However, its quarterly revenue rose 4.9% YoY to RM4.12 billion. For the cumulative 12-month period, Batu Kawan’s earnings surged 15% YoY to RM417.28 million, while revenue increased slightly to RM16.08 billion against RM16.05 billion a year ago.

On prospects, Batu Kawan, which owns a 47.16% stake in KLK, expects its overall profit to be better in FY21.

Batu Kawan’s shares ended 1.9% or 30 sen higher at RM16.12 yesterday, valuing the group at RM6.44 billion.