Published: Monday July 16, 2012 MYT 8:43:00 AM
Updated: Monday July 16, 2012 MYT 9:11:13 AM
RHB Research maintains Market Perform on IJM Plantations
It said on Monday the higher fair value was after the earnings revision based on unchanged target price-to-earnings ratio (PER) of 14 times CY13 earnings.
"We continue to highlight IJMP's sensitivity to CPO price movements, where every RM100/tonne change in CPO price would affect IJMP's earnings by 5%-7% per annum," it said.
RHB Research said the highlights of IJM Plantations were the year-to-June production decline of 37.2%; signs of recovery from July in place; CPO pricing power was weak in 4QFY03/12 and part of 1QFY03/13, but this should normalise.
Other factors were new planting of 7,000ha achieved in FY03/12, lower targets for FY03/13-15; production costs expected to rise by about 5% in FY03/13; and impairment on cogeneration plant in 4QFY04/12 may be repeated if capacity utilisation weakens further.