HOLD for its 7.3sen 1 st interim DPS
1Q22 core PATMI exceeded our expectations. Headline profits were
boosted by lumpy one-off land disposal gains. However, its 1st interim DPS
of 7.3sen announced has thus far lagged our expectation in terms of payout
ratio. Looking forward, core PATMI is likely to weaken in 2H as we expect
CPO price to soften in 2H and cost pressures (ie minimum wage hike and
fertiliser cost) will become more apparent. We maintain our RNAV-TP of
MYR1.03 and keep our HOLD call for its attractive dividends in FY22. We
prefer KLK MK (BUY, CP: 26.42, TP: 30.70).
1Q core PATMI lifted by higher CPO ASP & output
1Q22 headline PATMI of MYR435m (+35x YoY, +411% QoQ) was largely lifted
by a MYR364m gain on disposal of Kulai Young land in Johor. Adjusted for
the disposal gain (net of real property gains tax), we estimate its 1Q22
core PATMI at MYR111m (+804% YoY, +30% QoQ) which met 35% of our fullyear estimate/consensus. 1Q core performance was lifted by high CPO ASP
achieved (MYR6,030/t; +61% YoY, +20% QoQ) and higher FFB output (+9%
YoY, -21% QoQ). The CPO ASP achieved continues to reflect closely MPOB’s
average pricing, suggesting BPLANT has little, to no forward sales.
Fertiliser application likely subdued in 1Q22
1Q FFB output met 21% of our full-year forecasts; within historical ranges.
We are keeping our modest 3% YoY FFB growth forecast. We estimate its
1Q22 all-in operating cost of production to be MYR2,281/t, lower than
FY21’s MYR2,346/t average cost. Given our expectation of higher windfall
taxes, increased Sabah and Sarawak sales taxes, and higher fertiliser
prices, the lower unit cost in 1Q appears to suggest that BPLANT may not
have sufficiently fertilised in 1Q22 as planned.
1Q dividend payout ratio shy of our expectation
A 1st interim DPS of 7.3sen was announced (ex-date: 9 June), on track to
achieve our forecasted 14.1sen DPS for FY22E. Nonetheless, the DPS
announced in 1Q22 translated to a payout ratio of just 38%, below our
assumption of 49% for the year.