Stock Name: GENP
Company Name: GENTING PLANTATIONS BERHAD
Genting Plantations Bhd
(July 28, RM7.85)
Maintain neutral at RM7.85 with target price of RM9.06: Two key positives emerged from our recent visit. First, the group's 1H11 palm oil output was ahead of our estimates and second, the new Johor Premium outlets will help boost the long-term development values of its Indahpura project.
We fine-tune our earnings forecasts (FY11 +1%, FY12 -2%) but maintain our target price at RM9.06,'' based on a 10% discount to sum-of-parts. Our 'neutral' call remains as the stock lacks near-term catalysts and trades in line with its historical price-earnings valuations.
The group's fresh fruit bunches (FFB) output in 1H11 expanded by 13% year-on-year, above our 6% growth forecast for the full year. We are also positive on its investment in Johor Premium Outlets as the retail venture that is due to open in November will help boost the value of the group's surrounding land in the longer-term as well as property sales at its Indahpura project.
Higher labour costs may kick in the later part of the year if the group decides to raise the salaries of its estate workers. The planned RM200 per month increase could crimp our FY12 net profit forecast by up to 3.6% if not offset by productivity gains. Also, year-to-date new plantings of 1,500ha are behind schedule. The group's full year target of 10,000 to 15,000ha is unlikely to be met. ' CIMB Research, July 28
This article appeared in The Edge Financial Daily, July 29, 2011.
Company Name: GENTING PLANTATIONS BERHAD
| Research House: CIMB | Price Call: HOLD | Target Price: 9.06 |
Genting Plantations Bhd
(July 28, RM7.85)
Maintain neutral at RM7.85 with target price of RM9.06: Two key positives emerged from our recent visit. First, the group's 1H11 palm oil output was ahead of our estimates and second, the new Johor Premium outlets will help boost the long-term development values of its Indahpura project.
We fine-tune our earnings forecasts (FY11 +1%, FY12 -2%) but maintain our target price at RM9.06,'' based on a 10% discount to sum-of-parts. Our 'neutral' call remains as the stock lacks near-term catalysts and trades in line with its historical price-earnings valuations.
The group's fresh fruit bunches (FFB) output in 1H11 expanded by 13% year-on-year, above our 6% growth forecast for the full year. We are also positive on its investment in Johor Premium Outlets as the retail venture that is due to open in November will help boost the value of the group's surrounding land in the longer-term as well as property sales at its Indahpura project.
Higher labour costs may kick in the later part of the year if the group decides to raise the salaries of its estate workers. The planned RM200 per month increase could crimp our FY12 net profit forecast by up to 3.6% if not offset by productivity gains. Also, year-to-date new plantings of 1,500ha are behind schedule. The group's full year target of 10,000 to 15,000ha is unlikely to be met. ' CIMB Research, July 28
This article appeared in The Edge Financial Daily, July 29, 2011.
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