Stock Name: KLK
Company Name: KUALA LUMPUR KEPONG BHD
KUALA LUMPUR: Hong Leong Investment Bank Research has lowered its target price for plantation firm Kuala Lumpur Kepong Bhd to 23.39 ringgit from 23.60 ringgit to reflect lower forecasts for the company's earnings.
Hong Leong lowered net profit forecasts for the next two years by up to 3.5 per cent to reflect lower assumptions of fresh fruit branches (FFB) output, and the fact that contributions from two new refineries and an oleochemical plant are expected to come onstream only next year. KLK's existing refineries were affected by the revision of export tariffs in Indonesia and the weak global economic outlook, Hong Leong added.
"In our view, the weak performance of KLK's refinery operations will likely improve when its two new refineries in Indonesia commence operations. KLK would benefit from the tax advantage in Indonesia, given that its land bank there contributes over 40 percent of total FFB production," it added.
The brokerage maintained its 'hold' rating on the stock.
Shares of KLK dipped 1.54 per cent to RM21.7 after Malaysian palm oil futures fell to a three-year low on Tuesday. - Reuters
Company Name: KUALA LUMPUR KEPONG BHD
| Research House: HLG | Price Call: HOLD | Target Price: 23.39 |
KUALA LUMPUR: Hong Leong Investment Bank Research has lowered its target price for plantation firm Kuala Lumpur Kepong Bhd to 23.39 ringgit from 23.60 ringgit to reflect lower forecasts for the company's earnings.
Hong Leong lowered net profit forecasts for the next two years by up to 3.5 per cent to reflect lower assumptions of fresh fruit branches (FFB) output, and the fact that contributions from two new refineries and an oleochemical plant are expected to come onstream only next year. KLK's existing refineries were affected by the revision of export tariffs in Indonesia and the weak global economic outlook, Hong Leong added.
"In our view, the weak performance of KLK's refinery operations will likely improve when its two new refineries in Indonesia commence operations. KLK would benefit from the tax advantage in Indonesia, given that its land bank there contributes over 40 percent of total FFB production," it added.
The brokerage maintained its 'hold' rating on the stock.
Shares of KLK dipped 1.54 per cent to RM21.7 after Malaysian palm oil futures fell to a three-year low on Tuesday. - Reuters
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