4Q21 headline PATMI weighed down by net FV loss
No dividends declared despite record CPO ASP
FY21 core PATMI beat our estimates by 36%, thanks to record high CPO ASP achieved. As expected, no dividend has been proposed for FY21 as THP’s high net gearing of 126% dictates the need to deleverage as priority. Despite our higher CPO ASP forecasts, we continue to assume zero dividend payouts in the near future. THP remains a SELL despite a higher TP of MYR0.71 after rolling forward valuation to FY23E on revised 0.8x forward P/NTA, pegged at 5Y mean on improving CPO outlook (previously MYR0.48
TP on 0.6x P/NTA, -1SD). THP lacks catalyst.
4Q21 core PATMI lifted by better CPO ASP
4Q21 headline PATMI of MYR2m (+15% YoY, -93% QoQ) was dragged down by MYR57m in gross FV loss on biological assets, mitigated by MYR7m of FV gain on forestry. Adjusted for the net FV loss, 4Q21 core PATMI was MYR38m (+215% YoY, +139% QoQ), bringing FY21 core PATMI to MYR73m (+247% YoY).
The stronger 4Q21 core PATMI was due to better CPO ASP of MYR4,508/t (+58% YoY, +24% QoQ) although the price achieved was 13% below MPOB’s spot prices due to some forward sales locked in earlier. The high CPO ASP more than offset lower FFB output (-6% YoY, -9% QoQ).
FY21 FFB output hurt by shortage of harvesters
We estimate FY21 all-in cost of production was at a higher MYR2,735/t (+28% YoY) due to lower FFB yield of 13.36t/ha (-19% YoY) and higher direct taxes paid (ie State and windfall profit levy). FY21 FFB output fell -16% YoY to 0.70mt due to labour shortages especially in Sarawak. For FY22E, we now forecast no FFB output growth for the group.
Raising our CPO ASP and PATMI forecasts
Following our industry-wide CPO ASP revisions to MYR4,100/t (from MYR3,200/t) for 2022E and MYR3,200/t (from MYR3,000/t) for 2023E, we raise our FY22E/23E core PATMI forecasts for THP by 210%/28% respectively. We introduce our FY24E EPS forecast. MYR777m of THP’s assets have been earmarked for disposal. Without any asset disposal, we forecast THP’s net gearing to remain high at ~100% by the end of FY22E.