Anticipate record 3Q results, and ESG Tear Sheet highlights
Dividend upside from improving prospects
We expect BPLANT’s 3Q core profits to beat our earnings expectations buoyed by high CPO ASP which will more than offset its weak output. With better results, we also expect BPLANT to reward shareholders with higher dividend payout. Pending its results release, we are maintaining our EPS and DPS forecasts. As for ESG, we assess its overall ESG risk to be medium given inherent business risks operating over a wide geographical area in Malaysia. BPLANT remains one of our preferred BUYs with a discounted RNAV-TP of MYR0.90. It is rich in asset value as some of its land bank accumulated over the past 50 years is now prime.
Record 3Q core profits a likely scenario
BPLANT is due to announce its 3Q results at month end. We expect 3Q21 core PATMI will more than double YoY to MYR53m-59m (+195-228% YoY, +10-22% QoQ), buoyed by better-than-expected CPO ASP achieved as we expect its ASP to closely reflect that of MPOB’s CPO spot ASP of MYR4,440/t (+60% YoY, +6% QoQ) given its minimal forward sales policy. The higher CPO ASP will more than offset its weaker 3Q FFB output (263,276t; -4% YoY, +14% QoQ) mainly due to shortage of foreign workers.
Dividend bonanza is possible for FY21
The strong 3Q21 core performance should bring our 9M21 core PATMI to MYR114m-120m, exceeding our FY21 full-year forecast of MYR101m. Our forecast has yet to incorporate i) recently announced Kulai land disposal worth MYR429m (19.2sen/sh) that will lead to an estimated net disposal gain of MYR323m (14.4sen/sh); and ii) recent upward revisions to our
industry-wide CPO ASP forecasts for 2021 (from MYR3,500/t to MYR4,300/t) and 2022 (from MYR2,800/t to MYR3,200/t). Hence, we expect BPLANT’s FY21 DPS to beat our 3.6sen forecast (1H21A: 2.6sen).
ESG: Towards a greener future
BPLANT has a sustainable palm oil policy that is broadly tracks industry leaders, with a commitment on “no deforestation, no peat, no exploitation” (NDPE). It has a time bound plan to achieve 100% RSPO certification by 2023 (2020: 54% at estate and 60% at mill levels). Please see our ESG Tear Sheet overleaf for greater details.