IJM - HOLD FV RM3.80

Stock Name: IJM
Company Name: IJM CORPORATION BHD

Research House: JUPITER

Price Call: HOLD

Target Price: 3.80

3Q FY12 Results 

9MFY12 results above expectation IJMP's 9MFY12 resultswere above our expectations. 9-month PBT of RM200.8m accounted for about 92% ofour full year target whilst revenue of RM355.7m accounted for about 78% of ourfull year estimate. For the 9-month period under review, revenue rose 12% whilenet profit was up by 24% to RM150.2m on better commodity prices and higher FFB production. The average CPO price wasRM3,027/MT compared to RM2,671/MT and the average PKO price increased fromRM3,855/MT to RM4,134/MT.  FFB productionwas 12% higher on a recovery from palm yield stress in the previous financialyear.  

Indonesian estates had contributed about RM7.6min revenue to its 9M results.  FFBproduction of 16,367MT was only accounted for about 3% of its total FFB production.Its Indonesian operations are still under the planting development stage,hence, contribution is insignificant compared to Sabah operations.  The group had previously expressed itsintention to invest RM1b in its oil palm plantations in Indonesia during2012-2014 period. To date, the group has planted over 13,600ha in Indonesia.The Indonesian operations will contribute meaningfully by 2014.

3QFY12 revenue of RM146.4m was 9% higher YoYbut 19% lower QoQ. The lower QoQ revenue was due to lower sales volume for CPOand PKO as well as lower commodity prices. Nevertheless, operating margin of 48.9%was higher compared to 34.8% in 2Q. 

Recommendation

We have tweaked our forecast on its better YTDresults.  Based on a forward PE of 14x,our derived fair value is RM3.80.  HOLD

Source: Jupiter Securities