Sarawak Plantation's Shares Flat Despite Higher Core Earnings

KUALA LUMPUR, Aug 26 (Bernama) -- Analysts were divided on Sarawak Plantation Bhd's outlook, despite higher core earnings of RM17 million in the second quarter of the financial year 2024 (2Q 2024), a 39 per cent increase year-on-year (y-o-y).

The plantation company's shares remained flat at RM2.17, with 7,400 shares traded at 11.55 am, giving it a market capitalisation of RM608 million.

Public Investment Bank Bhd (PIBB) maintained its earnings forecasts for Sarawak Plantation, anticipating a strong performance in the second half of FY2024 (2H FY2024) due to seasonally higher production and lower costs.

“Stripping out a RM19.9 million gain on the fair value of biological assets and a write-off in property, plant and equipment, Sarawak Plantation registered core earnings of RM25.6 million for 2Q FY2024, up 20.2 per cent y-o-y.  

“Nevertheless, these results account for only 34 per cent and 31 per cent of our and the street's full-year expectations, respectively,” PIBB said.

PIBB reiterated its “outperform” rating on Sarawak Plantation, with an unchanged target price of RM2.74, based on ten times FY2025 earnings-per-share.

Meanwhile, MIDF Investment Bank Bhd adjusted its earnings forecasts for Sarawak Plantation by +2.5 per cent, -17.2 per cent, and -27.3 per cent y-o-y for the financial years 2024, 2025, and 2026, respectively. 

These revisions account for the updated average crude palm oil target prices of RM3,800, RM3,600, and RM3,400 per metric ton in those years, as well as elevated production costs.

The bank maintained a “neutral” rating on Sarawak Plantation, with a revised TP of RM1.98, rolling over its valuation to an 8.8 times price-to-earnings ratio, pegging full FY2025 earnings-per-share at 22 sen.

-- BERNAMA