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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


KUALA LUMPUR: RHB Research Institute is maintaining its Market Perform recommendation on IJM Plantations and raised the fair value to RM3.60 from RM3.40.

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.

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