A strong end to FY21
Results exceeded expectations
FY21 core PATMI beat our/street estimates on record high CPO ASP achieved. TSH’s strong earnings momentum is likely to sustain into FY22E driven by the great start to CPO prices in 2022. Following our EPS upgrade, we retain our BUY call with a higher TP of MYR1.60 after rolling forward valuation to FY23E on unchanged 20x PER peg, at -1SD of 5Y mean (from MYR1.48 TP on 20x FY22E PER peg). An interim DPS of 3sen was declared (ex-date: 30 Mar).
4Q21: Benefitted immensely from high CPO ASP
4Q21 core PATMI grew 176% YoY to MYR60m (+27% QoQ), bringing FY21 core PATMI to MYR174m (+154% YoY) which met 116%/115% of our/consensus estimates. 4Q core PATMI was boosted by higher CPO ASP achieved of MYR4,347/t (+56% YoY, +21% QoQ) which more than offset lower FFB output (-23% YoY, -18% QoQ) on recent change in crop pattern especially in Kalimantan. Meanwhile, share of associate/JV profits rose 151% YoY to MYR30m (+117% QoQ) in 4Q. By our estimate, FY21 all-in operating cost to customer was a higher MYR2,223/t (+29% YoY) due to higher windfall and Sabah sales taxes as well as fertiliser cost.
Anticipating output recovery of 5% YoY in FY22E
FY21’s FFB output grew just 1% YoY to 0.92mt. For FY22E, TSH is again guiding for a recovery in output (+7-11% YoY) but we have conservatively assumed just 5% YoY FFB growth to 0.97mt.
Raising FY22E/23E EPS by 61%/10%
Following our industry-wide CPO ASP revisions to MYR4,100/t (from 3,200/t) for 2022E, and MYR3,200/t (from 3,000/t) for 2023E, we raise our FY22E/23E core EPS forecasts for TSH by 61%/10% respectively. We
introduce our FY24E EPS forecast. Note that our FY22E forecast has yet to factor in the proposed disposal of some of TSH’s Sabah estate measuring 3,007 ha (planted: 2,933 ha) and 1 mill for MYR248m cash.
The disposal is estimated to net a gain of MYR104m.