Strong earnings delivery in 3Q21
Results beat expectations
9M21 core PATMI exceeded our/street estimates on high CPO ASP achieved. Strong earnings momentum is likely to sustain into 4Q21 given still good CPO ASP. Following our earnings revision, we tweaked our TP to MYR1.48 on 20x FY22E PER peg (updated -1SD 5Y mean) from MYR1.46 on 21x FY22E PER. Maintain BUY.
Lifted by higher CPO ASP and output growth
3Q21 core PATMI grew 251% YoY to MYR47m (+22% QoQ), bringing 9M21 core PATMI to MYR113m (+142% YoY) which met 87%/80% of our/consensus full-year estimates. 3Q core PATMI was boosted by higher CPO ASP achieved of MYR3,586/t (+52% YoY, +4% QoQ) and FFB output (+7% YoY, -6% QoQ). 3Q21 CPO ASP achieved was broadly in line with our estimated blended regional spot CPO ASP (given TSH’s much larger exposure to Indonesia). Meanwhile, share of associate/JV profits rose 142% YoY to MYR14m (+83% QoQ). By our estimate, 9M21 all-in operating cost to customer was a higher MYR2,140/t (+25% YoY) due to higher windfall and Sabah sales taxes as well as fertiliser application.
9M21 FFB up 11% YoY
9M21 FFB output growth to 722,561mt (+11% YoY) was within TSH’s guidance of 7-11% YoY for FY21E. 9M21 output met 73% of our full year forecast. We are keeping our 9% YoY FFB growth for FY21E.
Raising our CPO ASP and PATMI forecasts
Following our industry-wide CPO ASP revisions to MYR4,300/t (from MYR3,500/t) for 2021, MYR3,200/t (from MYR2,800/t) for 2022, and MYR3,000/t (from MYR2,800/t) for 2023, our FY21E/22E/23E core EPS
forecasts for TSH are raised by 14%/6%/0.2% respectively. Our new EPS also factored in revisions to windfall profit levies from 1 Jan 2022, and rising cost pressures (especially fertiliser). We do not expect TSH to be affected by Cukai Makmur in FY22E.