IOI Corp earnings maintained at RM1.6b

KUALA LUMPUR: OSK Investment Research is maintaining its earnings forecast of RM1.6bil for IOI Corporation Bhd in its financial year ending June 30, 2009.

The research house said its FY09 forecast of RM1.6bil was low, based on a conservative crude palm oil (CPO) price assumption of RM1,650 per tonned for CY09.

“We are comfortable with our low earnings forecast as the upcoming quarters will show further weakness, that is IOI Corp’s earnings for FY09 is front-end loaded on the downtrend in CPO prices,” it added.

Last Friday, IOI Corp announced its earnings for the first quarter ended Sept 30 fell 36% to RM290.5mil from RM451.52mil following unrealised translation loss on US dollar loans of RM212.2mil.

IOI Corp had included realised foreign exchange loss of RM100.6mil in the first quarter also.

Commenting on the Q1 earnings, OSK Research said IOI Corp’s Q1 results remained strong as they did not reflect the currently low CPO prices.

OSK Research said IOI Corp’s Q1 core net profit (after excluding the currency translation loss) came in at RM502.7mil.

In annualised terms, it matches consensus’ expectation but was 25.5% above our forecast of RM1.6bil. The results would have been stronger if not for the RM63.4mil in forex loss realised by its downstream division.

“Although its performance upcoming quarters will certainly be weaker, we do not expect any nasty surprises as the much of the weakening in CPO price and strengthening in the US dollar occurred in the September quarter.

“Gearing is at an uncomfortably high 46% but we are convinced that IOI’s stock price saw the worst of the selling when it fell to a low of RM2.08. Maintain Trading Buy call with target price of RM4.54,” it said.

The research house said IOI Corp realised an average CPO price f RM3,391/tonne for Q1 against RM3,389 per tonne in the June quarter.

Compared with the Malaysian Palm Oil Board average of RM3,520/tonne for June and RM2,796 for the September quarter, its realised CPO prices were impressively high due to aggressive forward sales.

This helped to power the plantation segment EBIT to a record high of RM567.1m, which was up by 8.6% from the preceding quarter.

IOI Corp’s downstream registered revenue of RM164.6mil, up 3.9% quarter-on-quarter, which suggested the utilisation rate remained high and contract defaults were at a minimum.

However, the segment earning before interest and taxation was down by RM56mil quarter-on-quarter due to booked in realised forex losses, which could have been caused by default by overseas buyers.

“If we attribute the RM63.4mil forex loss to the 222,000 tonnes of CPO sold, IOI Corp’s realised CPO price would be lower by RM286 per tonne at RM3,105 per tonne, which was still high compared to the MPOB average,” it said.

Any business can went burst if there are no strong management and proper system. Recent financial turmoil in US which may caused most of the banks collapse if there the government did not come out and rescue. But banking sector in malaysia still stay quite well. This is becos of the management.

Personally i would say plantation sector worth to be invested but you got to choose the companies that have strong fundamentals.

This post has been edited by darkknight81: Nov 10 2008, 01:02 PM

Sime Darby eyeing distressed plantations

KUALA LUMPUR: Sime Darby Bhd plans to speed up its replanting of oil palm trees and will consider buying distressed plantation companies, said group chief executive Datuk Seri Ahmad Zubir Murshid.

“We may take advantage of current market conditions to speed up replanting of our lower yield acreage,” he said.

Newly replanted areas take five to six years to reach peak production.

Sime Darby has targeted a replanting rate of 4% to replace trees that are more than 25 years old, Ahmad Zubir told reporters after the company’s annual general meeting yesterday.

The plantation heavyweight was also looking to buy distressed, smaller plantation companies.

“When CPO price was shooting up, many people wanted to be in the plantation sector, but now as prices come down and credit begins to tighten at the same time, some of these smaller plantations may be distressed and be looking to sell,” Zubir said.

Sime Darby expects crude palm oil prices to stabilise at RM1,800 to RM2,000 per tonne in 2009.

Benchmark three-month CPO futures closed lower for a second consecutive day yesterday, going down RM47 or 2.96% to RM1,539 per tonne.

Zubir said Sime Darby’s palm oil production cost currently stood at RM1,100 per tonne, but falling fuel prices and potentially lower fertiliser costs in the second half of the year could help reduce Sime Darby’s production costs.

Sime Darby is aiming for a production cost of RM800 per tonne in the long term, he said.

Sime Darby would also continue to expand into “green field” plantations, Zubir said, referring to new oil palm estates, and was looking to buy up land in Indonesia for this purpose.

The company’s goal was “a strong balance sheet and we will have to consider how much we want to spend (on expansion purchases),” he said.

URL: http://biz.thestar.com.my/news/story.asp?f...70&sec=business

i thought the CPO price follow crude oil?
Let say crude oil USD60 per barrel.

crude oil per litre = USD60 x 3.5 / 159 = Rm 1.32/litre
1 litre ~ 1 kg

also around RM1320 per tonne only.

LOL, oil and palm oil are 2 totally different product, although the price movement of commodities generally is positive and highly correlated, but it doesn't need to follow on oil movement exactly.

You can't subsitute between both of them. You can cook with crude oil nor you can fill up your car with palm oil? (edited for typo error)

Both price is actually move on their own on the basic of their fudnamental issue i.e. demand and supply, but commodities generally and mostly move in correlated pattern as it has to do with general economy demand.

This post has been edited by cherroy: Nov 14 2008, 09:13 AM

Like Cheeroy said, only after a certain price does the CPO follows the Crude oil. As when the crude become cheaper, there is no need for CPO to substitute crude anymore and thus lost it's support for it's higher price.

So it doesn't mean that crude falls to USD15 the CPO also follows it down. CPO has it's own support from consumer consumption and ensures it stays above the RM1k range. Consumption demand is still there, just that the demand for it to be a substitute for crude oil is not there anymore.

erm guys, u all know about 'Security Valuation'?
which i hv in hand for IOICORP, and their give me this,'Security Valuation'
lolz.. dont know wht it mean... someone enlighten me?

This post has been edited by Tctf: Nov 16 2008, 11:27 AM

United Plantations Q3 earnings up 58% to RM89.9m

URL: http://biz.thestar.com.my/news/story.asp?f...09&sec=business

KLK profit hits RM1bil Its full-year revenue jumps 55%

URL: http://biz.thestar.com.my/news/story.asp?f...86&sec=business

Most of the shares stated there got undertake share buyback wan ya?

[quote=pinkbubble,Nov 25 2008, 09:18 PM]
Most of the shares stated there got undertake share buyback wan ya?

[/quote
i also have some question about the IOI company,can i know IOI hav how much of net tangible asset?and how many of its fair price?

i hide my money in brk.b now manage to grab some at 2500 pershare,
feel like buying mutual fund,
even better feel like hiring buffet to manage my portfolio;

malaysia, with 22mil population, there is a lot of limitation,
goverment try to control our spending; on luxury goods, 300% tax on car, and housing shoplot most arent freehold,
where is this money gone ? now with interest rate come down and ringgit got weaken against dollar .....they did it on purpose to boost up their sales. as a regular citizen what can i say?

anyway there is too many limitation and most large corperation own by govermant; msic,malayan,rhb,cimb,sime,......all poorly manage cooperation,lack of transparency i dont see sime have future, with growing eps is nil,

anyway that is my perception, dont quote me if i am wrong

---

Added on November 27, 2008, 11:41 pm the only good think i guess buying goverment manage company is they will never going bankrupt,

unlike usa; enron,world.com,lehman brother

This post has been edited by normanTE: Nov 27 2008, 11:41 PM

IOI is seeking legal advice to recover forfeited deposit?

On the other hand, Inverfin might also be seeking legal advice how to collect liquidated damages payable by IOICorp as a result of termination?

Kulim, Asiatic, IOI Corp lead decliners at midday

KUALA LUMPUR: Kulim, Asiatic and IOI Corp led plantation stocks lower at midday on Friday, tracking the decline in crude palm oil (CPO) and light crude oil prices while TM International came under selling pressure.

At 12.30pm, the KL Composite Index had fallen 5.62 points to 841.24. Turnover was 115.45 million shares done valued at RM205.11mil. There were 94 gainers, 213 losers and 170 stocks unchanged with 832 counters were not traded.

URL: http://biz.thestar.com.my/news/story.asp?f...53&sec=business

haiya, IOI dropped only six cents they want to make it a news.... its a news if it drops 50cents....

Speculation a threat to oil palm planters

Speculation in the crude palm oil (CPO) futures market could pose a threat to the plantation industry under current market conditions.

Interband Group palm oil trader Jim Teh told StarBiz that there was a strong speculative element in CPO prices that shot up from RM1,488 per tonne to about RM1,600 last week on thin volume but had tapered off this week

URL: http://biz.thestar.com.my/news/story.asp?f...81&sec=business

Mixed outlook for plantation sector

URL: http://biz.thestar.com.my/news/story.asp?f...77&sec=business

normanTE,

<<the only good think i guess buying goverment manage company is they will never going bankrupt,>>

Google "UEM Renong Reverse Takeover" before you make that kind of statement. And, if the counter drop to $0.01 and technically is not bankrupt, you still lose a lot of money.

Dreamer

Mobius favours mining, consumer plays

The emerging markets fund manager says food commodities such as palm oil could be a possible pick this year

CONSUMER and mining companies in emerging markets could be a safe haven against the rapidly spreading global recession, veteran emerging markets fund manager Mark Mobius said today.

“We feel that this year would be the year of recovery of stock markets in emerging economies not necessarily economies themselves,” said Mobius, executive chairman Templeton Asset Management which handles about US$30 billion in emerging assets.

“There is an incredible build-up of foreign reserves in the emerging markets, and the increase in money supply is quite dramatic. We have seen a very big increase of money coming into markets.”

Investors have already been pushing cash into emerging market stocks, data for the week ended January 14 from Boston-based fund-tracker EPFR Global showed on Friday.
Consumer and mining shares could be the top choices in emerging markets during this deepening recession, thanks to still-rising per capita income in China and India as well as low commodity prices this year, Mobius said.

“Basic consumer products will still be sold. They will continue to be profitable, particularly in Asia because consumers are getting richer,” he said.

“Of the commodities, the way we get exposure to commodities is limited but it’s mainly mining companies.”

Mobius did not discuss individual consumer and mining stocks, saying only that Templeton, which is the asset management arm of Franklin Resources Inc, favoured gold, iron ore, nickel, palladium, platinum related shares.

Food commodities such as palm oil could be a possible pick this year but there were not many companies to choose from.

“In Malaysia, there is the palm oil industry but even there, it is difficult to get a pure exposure. Sime Darby is diversified,” Mobius said, referring to the world’s largest palm producer in terms of plantation assets. - Reuters

This post has been edited by SKY 1809: Jan 18 2009, 09:58 AM

Thought i'd revive this topic again. Palm oil prices have somewhat recovered and many plantation companies are coming into play.