Strong 3Q earnings expected for Boustead Plantation


BOUSTEAD Plantation Bhd’s third quarter (3Q21) core profit is expected to beat earnings expectations, buoyed by high crude palm oil (CPO) average selling price (ASP) which will more than offset its weak output.

Maybank Investment Bank Research (Maybank IB Research) analyst Ong Chee Ting expects the group’s operating profit after tax and minority interests (Patmi) in 3Q will more than double year-on-year (YoY) to RM53-59 million.

“We expect its ASP to closely reflect Malaysian Palm Oil Board (MPOB)’s CPO spot ASP of RM4,440 per tonne given its minimal forward sales policy.

“The higher CPO ASP will more than offset its weaker 3Q fresh fruit bunch (FFB) output mainly due to shortage of foreign workers,” stated Ong in a research note yesterday.

Moreover, the strong 3Q21 core performance should bring the planter’s nine months of 2021 (9M21) core Patmi expectation to RM114-120 million, exceeding the analyst financial year of 2021 (FY21) full-year forecast of RM101 million.

“Our forecast has yet to incorporate a recently announced Kulai land disposal worth RM429 million (19.2 sen/share) that will lead to an estimated net disposal gain of RM323 million (14.4 sen/share), and recent upward revisions to our industry-wide CPO ASP forecasts for 2021 (RM4,300/tonne) and 2022 RM3,200/tonne),” said Ong.

Hence, the analyst expects Boustead Plantation’s FY21 dividend per share (DPS) to beat its 3.6 sen forecast.

Maybank IB has however maintained its earnings per share (EPS) and DPS forecasts pending the group’s results release at month-end.

On its environmental, social and governance (ESG) yardstick, the analyst assesses Boustead Plantations overall risk to be medium given inherent business risks operating over a wide geographical area in Malaysia.

“Boustead Plantation has a sustainable palm oil policy that broadly tracks industry leaders, with a commitment on ‘no deforestation, no peat, no exploitation’ (NDPE),” noted the analyst.

The analyst added Boustead Plantation has a time-bound plan to achieve 100% the Roundtable on Sustainable Palm Oil (RSPO) certification by 2023.

Maybank IB has preferred a “Buy” call on Boustead Plantation with a discounted revised net asset value (RNAV) target price (TP) of 90 sen.

The stock was last traded unchanged at 68 sen, valuing the company at RM1.52 billion.


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