Strong performance by smaller palm oil firms

PETALING JAYA: Shares in smaller sized palm oil firms soared yesterday led by Glenealy Plantations (M) Bhd and Chin Teck Plantations Bhd, as both companies reported strong profit growth on the back of rising crude palm oil (CPO) prices.

While these companies are deemed less attractive to large investors when compared with bigger planters like IOI Corp Bhd or Kuala Lumpur Kepong Bhd due to the lack of trading liquidity, their low price-to-earnings (PE) multiples and above average dividend yields make them good defensive buys, especially at times of stock market volatility.

"These companies are equally well managed and their earnings outlook are equally promising,'' a local fund manager said.

Glenealy reported a net profit of RM49.2mil, or 37.6 sen per share, on revenue of RM62.9mil. This includes a one-time gain of RM21.6mil.

Miri-based planter Glenealy told Bursa Malaysia that the company achieved an average selling price of RM2,845 per tonne during the three months ended Dec 31, against RM2,574 per tonne achieved in the preceding quarter.

The average price secured during the period mirrored the benchmark CPO futures contract performance on Bursa Derivatives.

With the CPO futures traded consistently above RM3,000 per tonne levels since the start of the year, it is likely that plantation companies would continue to enjoy strong earnings growth going forward.

The benchmark third month futures contract was up RM113 to RM3,345 per tonne yesterday.

Shares in Glenealy rose 44 sen, or 9.8%, to close at RM4.94, which values the company at 7.2 times its historical earnings based on the trailing 12-month earnings per share (EPS) of 68.1 sen.

Assuming that Glenealy would be able to meet market forecast of 90.1 sen per share for year ending June 30, 2008 (FY08), its market valuation is even more attractive at these levels.

It is worth to note that yesterday's most actively traded stock IOI Corp was valued at 25 times its projected earnings.

Meanwhile, Glenealy's share price jump also provided some support to its parent company Lingui Development Bhd, which owns a 36% stake in the company.

The timber firm's net profit was down 57% to RM32.6mil, or 4.94 sen per share, during the quarter ended Dec 31, 2007 due to the drop in prices for plywood and veneer.

Lingui share price was up 3 sen to RM1.48. It hit a two-year low of RM1.41 on Jan 22.

Chin Teck climbed 40 sen, or 5.4%, to RM7.85 with 84,600 shares traded.

Like Glenealy, Chin Teck posted a sharp increase in net profit, up 152% to RM19.4mil, or 21.27 sen per share, in the first quarter ended Nov 30 against RM7.68mil made a year earlier.

Chin Teck had proposed an interim gross dividend of 25 sen per share for the first quarter, versus 15 sen per share in the previous corresponding period.

URL: http://biz.thestar.com.my/news/story.asp?f...80&sec=business

How about HSPLANT?

IOICORP is below RM 2.50 already.

IOICORP closed at RM 2.19 today.

IOI Corp first quarter forex loss at RM100m

KUALA LUMPUR: IOI Corp Bhd said its realised foreign exchange (forex) loss for the first quarter ended Sept 30 amounted to about RM100mil, compared with realised gain of RM7mil for the financial year ended June 30.

In a filing with Bursa Malaysia yesterday, IOI reiterated that the group had been utilising various methods of forward currency coverage and hedging to match the income streams and raw material purchase costs to minimise its exposure to the foreign currency risk and balance.

“The company wishes to further assure shareholders that the financial position of the group remains strong and it has no problem in meeting the cashflow requirements of its business operations,” it said.

URL: http://biz.thestar.com.my/news/story.asp?f...34&sec=business

CPO rebounds, plantations higher

KUALA LUMPUR: Crude palm oil (CPO) prices rebounded on Thursday, giving plantation stocks a major boost, while Asian markets greeted the US Fed’s rate cut with optimism as they hoped to avert a global recession.

At 12.30pm, the KL Composite Index had risen 18.41 points to 847.82. Turnover was 467 million shares valued at RM644mil. There were 365 gainers, 187 losers and 158 counters unchanged.

The KLCI is down sharply from the 1,016 on Oct 3 while more than RM141bil has been erased from its market capitalisation, down from RM769.55bil to RM628.54bil as of yesterday.

Asian markets advanced with Hong Kong’s Hang Seng Index surging 10.11% or 1,283.95 points to 13,986.02, Japan’s Nikkei 225 up 8.57% to 8,915.27, Singapore’s Straits Times Index gained 6.96% to 1,787.5 and the Shanghai A Share Index 1.16% to 1,827.98.

CPO rose RM78 to RM1,513 per tonne. off the early high of RM1,539.

Light crude oil added US$2.20 to RM69.70. The ringgit was also firmer against the US dollar at RM3.548 to US$1.

IOI Corp’s lesser than expected foreign exchange losses of RM100mil saw its share price surging 38 sen to RM2.63. It was the most active with 71.43 million shares done.

KL Kepong and Batu Kawan rose 45 sen each to RM7.60 and RM6.60 while Sime gained 25 sen to RM6.15.

Tanjong added 40 sen to RM10.20, BCHB 25 sen to RM6.05 and Genting 24 sen to RM4.24 while Resorts rose nine sen to RM2.30.

Lion Industries rose 8.5 sen to 58 sen, Gamuda added eight sen to RM1.43 and MRCB 5.5 sen to 57.5 sen.

BAT fell 50 sen to RM42 while DiGi slipped 40 sen to RM18.80 and Jaya Tiasa 25 sen to RM1.65.

Timber-based Limahsoon, which plunged 32.5 sen to closed at 17.5 sen yesterday, continued to slide, falling four sen to 13.5 sen

URL: http://biz.thestar.com.my/news/story.asp?f...43&sec=business

IOICORP surged above RM 3.

IOICORP closed at RM 3.08 today.

Smaller-cap plantations down

KUALA LUMPUR: The local stock market snapped its three-day rally as investors were quick to take profit, sending the 100-stock KL Composite Index below the key 900-level on Tuesday

Smaller-capitalised plantation stocks were among the major losers but in relatively thin volume while interest was seen in water stocks including JAKS, Puncak and KPS.

At 12.30pm, the KLCI had eased 1.2 points to 898.15 but off the mid-morning low of 889. Turnover was 615.8 million shares valued at RM602mil. There were 200 gainers, 312 losers and 117 counters unchanged.

Asian markets were mixed, with Japan’s Nikkei 225 up 4.77% or 408 points to 8,985.82 and Hong Kong’s Hang Seng Index rising 0.22% to 14,375.34.

Singapore’s Straits Times Index fell 1.43% to 1,856.87 and Shanghai’s A Share Index shed 1.66% to 1,776.86.

Light crude oil eased 60 cents to US$63.31 while crude palm oil futures fell RM65 to RM1,601.

Smaller-capitalised plantation stocks were among the bigger losers.

BLD Plantations eased 21 sen to RM2.59, Chin Teck and United Malacca 20 sen lower to RM5.25 and RM5.20 while Batu Kawan eased 15 sen to RM7.15 and Far East 14 sen to RM4.96. However, IOI Corp added two sen to RM3.10.

Puncak rose 25 sen to RM2.60 while KPS added 24 sen to RM1.63 and JAKS 11.5 sen to 50.5 sen.

Consumer-based stocks were among the major gainers but trade was relatively thin.

BAT, seen as a strong defensive counter, rose 50 sen to RM41 while Nestle added 25 sen to RM27.25 and Guinness 18 sen to RM4.98.

URL: http://biz.thestar.com.my/news/story.asp?f...58&sec=business

IOI Corp Q1 net profit falls 36%

KUALA LUMPUR: IOI Corp Bhd’s earnings for the first quarter ended Sept 30 (Q1FY09) fell 36% to RM290.5mil from RM451.52mil a year ago following unrealised translation loss on US dollar loans of RM212.2mil.

IOI Corp said in a statement on Friday it had included realised foreign exchange loss of RM100.6mil in the Q1FY09.

“After excluding the unrealised translation loss on US dollar denominated borrowings of RM212.2mil (Q1 FY08 - gain of RM34.9mil, the net earnings for Q1FY09 is RM502.7mil or 21% higher than Q1 FY08),” it said.

Plantation earnings rose 43% to RM567.1mil, boosted by significantly higher crude palm oil (CPO) prices.

Average CPO prices realised for Q1 FY09 was RM3,391 per tonne as compared to RM2,473 per tonne last year.

IOI Corp said the resource-based manufacturing segment reported an increase in profit by 18% or RM22mil despite the inclusion of the realised foreign exchange loss of RM63.4mil for Q1FY09.

“Overall, the group recognised a total realised foreign exchange loss of RM100.6mil in Q1FY09 from the resource-based manufacturing business segment and also from the partial conversion of proceeds from the US dollar borrowings,” it said.

It added the property segment’s operating profit of RM68.2 million for Q1FY09 was 38% lower than Q1FY08.

“The decrease is due mainly to soft property market conditions experienced in the current quarter and also the lower margins as a result of higher construction costs,” it said.


URL: http://biz.thestar.com.my/news/story.asp?f...12&sec=business

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

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

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

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

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IOI Corporation: BNP Paribas keeps BUY with a higher target price of RM5.00 (RM4.10 previously).

Plantation stocks buck trend

KUALA LUMPUR: Plantation stocks managed to retain their gains despite the overall market closing weaker and crude palm oil (CPO) prices falling for the first time in three days.

The plantation index closed 1.18% higher at 5,097.91 points, led by Kulim (M) Bhd, which gained 25 sen to RM6. Kuala Lumpur Kepong Bhd was up 20 sen to RM11.20, Kwantas Corporation Bhd put on 15 sen to RM2.09, while Sime Darby Bhd rose five sen to RM6.55.

IOI Corporation Bhd added eight sen to RM4.44, Sarawak Oil Palms Bhd six sen to RM2.42 and Asiatic Development Bhd two sen to RM4.96. United Plantations Bhd and Boustead Holdings Bhd remained unchanged at RM10.50 and RM3.66, respectively.

AmResearch said in a note it maintained an overweight stance on the sector as low inventory levels coupled with rising crude oil prices would sustain CPO prices. “We like bigger caps like IOI Corp and KLK. Among the smaller caps, we are positive on Asiatic Development and IJM Plantations Bhd.”

Based on the Malaysian Palm Oil Board (MPOB) report on May 11, palm inventory levels remained low, with April’s inventory falling 5.14% to 1.29 million tonnes, the lowest since April 2007, from 1.36 million in March.

CPO prices for July delivery, however, fell for the first time in three days, losing RM25 to RM2,660 a tonne on Bursa Malaysia Derivatives. A palm oil trader said CPO prices closed lower as market players had opted to close their long positions.

“Most market participants had expected inventory figures to fall lower to 1.2 million. So with April’s data at 1.29 million, players have opted to close position. We expect CPO prices to be range-bound this week, trading between RM2,600 and RM2,800 a tonne should tightness in supply remain,” she told The Edge Financial Daily via telephone on May 11.

The Kuala Lumpur Composite Index ended a marginal 1.28 points lower on May 11 at 1,025.5 points on late selling pressure. Gainers outpaced losers 448 to 362, while 196 counters traded unchanged. Trade was brisk with some 3.85 billion shares changing hands.

Based on Bloomberg data, the KLCI was trading at a price-to-earnings (P/E) ratio of 14.72 times, which was below its historical P/E of 15.63. KLCI’s P/E were 21-24 times during the bull markets of the 1980s and 1990s.

Key Asian markets were also mostly lower, with Singapore’s Straits Times Index down 3.22% to 2,166.1 points, and Hong Kong’s Hang Seng Index retreating 1.74% to 17,087.95 points.

Crude oil eased US$1.22 (RM4.29) to US$57.3 per barrel as at 6.18pm on the New York Mercantile Exchange after the recent surge last week.

Maybank Investment Bank technical chartist Lee Cheng Hooi pegged KLCI’s resistance between 1,037 and 1,064 points and support between 998 and 1,026 points. He said the support range should be “a very secure zone for bargain-hunting activities”.

“Since the current rise in the KLCI is flat, investors should not get caught at the end of this rebound move. The rebound could be of a sustained nature, but do not outstay the pseudo-bull’s welcome.

“There could be bouts of sporadic profit-taking but be prepared to buy on weakness, whilst disposing of some minor positions to lock in some short-term profits,” Lee said in a note.

URL: http://www.theedgemalaysia.com/business-ne...buck-trend.html