Stock Name: QL
Company Name: QL RESOURCES BHD
Research House: MAYBANK
QL Resources Bhd
(June 23, RM4.03)
Maintain buy at RM3.97 with higher target price of RM5.10 (from RM4.56): FY11 will mark the first year of positive net profit contribution from its Indonesian plantation, while more overseas projects begin to come onstream. Maintain buy with a raised RM5.10 discounted cash flow (DCF)-based target price (from RM4.56). QL remains our top consumer sector pick.
Since its first planting began in 2007, QL has invested steadily in its 74.5%-owned 10,000ha of palm oil plantations in East Kalimantan. We expect the first positive net profit contributions in FY11, and about RM20 million net profit in FY13. Our baseline projection for QL's FY13 net profit growth is 20.9%, with upside risks. This will help lift QL's baseline annual growth trend by as much as five percentage points from FY13, assuming crude palm oil (CPO) prices of RM2,400/MT.
We expect its wholly owned Vietnam layer farm to begin operations by end-FY11. Meanwhile, its marine division in Surabaya, Indonesia, will have its own plant and jetty by early-FY12 at the latest to boost overall surimi and fishmeal capacity by about 8% initially. These will help cement the 15% to 20% per annum net profit growth in FY12/13 and further out.
A layer farm near Jakarta, Indonesia, could be operational in mid-FY12 or 12 to 18 months out. This means that production capacity across its various downstream farming activities could rise by at least 15% to 20% per annum over the FY11/15 period.
After replacing our FY13 semi-explicit forecast (10% earnings before interest, tax, depreciation and amortisation growth) with our newly introduced FY13 forecast, our new DCF-based target price is RM5.10 (from RM4.56). We note, however, that should QL deliver on all its overseas expansion projects, there are upside risks to our FY12 and FY13 forecasts. ' Maybank IB Research, June 23
This article appeared in The Edge Financial Daily, June 24, 2010.
Company Name: QL RESOURCES BHD
Research House: MAYBANK
QL Resources Bhd
(June 23, RM4.03)
Maintain buy at RM3.97 with higher target price of RM5.10 (from RM4.56): FY11 will mark the first year of positive net profit contribution from its Indonesian plantation, while more overseas projects begin to come onstream. Maintain buy with a raised RM5.10 discounted cash flow (DCF)-based target price (from RM4.56). QL remains our top consumer sector pick.
Since its first planting began in 2007, QL has invested steadily in its 74.5%-owned 10,000ha of palm oil plantations in East Kalimantan. We expect the first positive net profit contributions in FY11, and about RM20 million net profit in FY13. Our baseline projection for QL's FY13 net profit growth is 20.9%, with upside risks. This will help lift QL's baseline annual growth trend by as much as five percentage points from FY13, assuming crude palm oil (CPO) prices of RM2,400/MT.
We expect its wholly owned Vietnam layer farm to begin operations by end-FY11. Meanwhile, its marine division in Surabaya, Indonesia, will have its own plant and jetty by early-FY12 at the latest to boost overall surimi and fishmeal capacity by about 8% initially. These will help cement the 15% to 20% per annum net profit growth in FY12/13 and further out.
A layer farm near Jakarta, Indonesia, could be operational in mid-FY12 or 12 to 18 months out. This means that production capacity across its various downstream farming activities could rise by at least 15% to 20% per annum over the FY11/15 period.
After replacing our FY13 semi-explicit forecast (10% earnings before interest, tax, depreciation and amortisation growth) with our newly introduced FY13 forecast, our new DCF-based target price is RM5.10 (from RM4.56). We note, however, that should QL deliver on all its overseas expansion projects, there are upside risks to our FY12 and FY13 forecasts. ' Maybank IB Research, June 23
This article appeared in The Edge Financial Daily, June 24, 2010.
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