MIDF Research expects no rapid increase in TH Plantation Bhd's earnings for the second half of this year as crude palm oil
prices are expected to remain subdued.
The research house said the group incurred substantially higher production cost in the second quarter of this year as a result of the yield enhancement plan.
"We also believe the ongoing yield enhancement plan will continue to drag margins within these two years," it said in a research note.
TH Plantation's earnings in the second quarter of this year grew stronger at 77.7 per cent to RM23.2 million quarter-on-quarter, attributable to lower tax rate, which resulted from higher capital allowance.
"However, its earnings declined by 27.8 per cent compared with the same period last year, as a result of lower on-year crude palm oil production and higher production cost," it added.
MIDF Research maintained its "neutral" call on the group, with an unchanged RM2.40 target price. -- Bernama
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