Bursa Malaysia Stock Price Target: IOICORP

Affin Investment Bank upgraded IOI Corporation Bhd to 'add' from 'reduce' after the property and plantations group proposed to spin off its property business as a separate and independent listed company.

The broking house also raised its target price on IOI Corp to RM5.62 per share from RM4.93.

"We believe revalued net asset value (RNAV) valuation with an appropriate discount based on the quantum of future earnings stream has basis for property companies with large land banks," Affin said in a research note on Wednesday.

It pegged the new listed property firm at RM4.42 per share, a discount to the RNAV.

The property firm is expected to be the largest of its kind in Malaysia with a total asset size of almost RM15 billion and total land bank of over 10,000 acres, spread across Malaysia, Singapore and China, according to Affin.

Total gross development value over the next three years is estimated at RM16 billion, it added.

Shares of IOI Corp dropped 0.18 per cent to RM5.45 per share at 10.07am, underperforming the benchmark stock index's 0.28 per cent rise.-- Reuters

January 9, 2013

Taking full control of its Xiamen project

Stock Name: IOICORP
Company Name: IOI CORPORATION BHD

Research House: MIDF

Price Call: HOLD

Target Price: 4.90

November 20, 2012

Net translation gain elevate earnings

Stock Name: IOICORP
Company Name: IOI CORPORATION BHD

Research House: MIDF

Price Call: HOLD

Target Price: 4.90

Signs of Things to Come

Stock Name: IOICORP
Company Name: IOI CORPORATION BHD

Research House: TA

Price Call: HOLD

Target Price: 5.64

September 4, 2012

FY12 sees earnings on the decline

Stock Name: IOICORP
Company Name: IOI CORPORATION BHD

Research House: ALLIANCE

Price Call: HOLD

Target Price: 5.19

April 13, 2012

Plantation - OVERWEIGHT - Tree stress effect may have just starte

Stock Name: SIME
Company Name: SIME DARBY BHD

Research House: KENANGA

Price Call: BUY

Target Price: 11.60

Stock Name: IJMPLNT
Company Name: IJM PLANTATIONS BHD

Research House: KENANGA

Price Call: BUY

Target Price: 4.25

Stock Name: TAANN
Company Name: TA ANN HOLDINGS BHD

Research House: KENANGA

Price Call: BUY

Target Price: 7.75

Stock Name: UMCCA
Company Name: UNITED MALACCA BHD

Research House: KENANGA

Price Call: BUY

Target Price: 8.00

Stock Name: KLK
Company Name: KUALA LUMPUR KEPONG BHD

Research House: KENANGA

Price Call: HOLD

Target Price: 23.60

Stock Name: IOICORP
Company Name: IOI CORPORATION BHD

Research House: KENANGA

Price Call: HOLD

Target Price: 5.60

Stock Name: GENP
Company Name: GENTING PLANTATIONS BERHAD

Research House: KENANGA

Price Call: HOLD

Target Price: 9.90

Malaysia's CPO inventory level for Mar-12 was reported at1.96m mt or 2% lower than the consensus estimate of 2.00m mt. It was also 6%below our estimate of 2.08m mt. The key surprise was the better-than-expectedexports growth of 11% MoM to 1.34m mt (5% above the consensus and ourexpectation of 1.28m mt). Judging from the CPO production severe YoY decline of14% to 1.21m mt in Mar-12, we believe that oil palm trees may have just enteredtheir tree stress period. Typically, CPO production will be flat or declineduring its tree stress period. Among the key CPO consumers, the highest exportgrowth was noticed in Pakistan (+125% MoM to 78k mt), Europe (+63% MoM to 174kmt) and India (+11% MoM to 120k mt). The latest USDA WASDE report was bullishto CPO prices as it reaffirmed the global soybean oil shortage for the 2011/12season. The global soybean oil inventory was cut by 0.17m mt or 6.2% from itsprevious forecast to only 2.56m mt. All the bullish fundamental factors mentioned continue to support ourOVERWEIGHT call on the plantation sector. We maintain our CY12 average CPO priceof RM3,200 per mt but may increase it further if soybean oil production continuesto deteriorate in South America. We have OUTPERFORM calls on SIME (TP: RM11.60) and IJM Plantation (TP: RM4.25) on valuation grounds.To leverage on their double digit FFB growth, we also have OUTPERFORM calls on Ta Ann (RM7.75) and UnitedMalacca (TP: RM8.00). Meanwhile, we maintain MARKET PERFORM calls on KLK (TP:RM23.60), IOI (TP: RM5.60) and GENP (TP: RM9.90).

Mar-12 stocks levelbelow expectation. The CPO inventory level of 1.96m mt was 2% lowerthan the consensus estimate of 2.00m mt. It is also 6% below our estimate of 2.08m mt. The key surprise was thebetter-than-expected exports growth of 11% MoM to 1.34m mt (5% above theconsensus and our expectation of 1.28m mt). As the exports growth of 11% MoMsurpassed the production increase of 2% MoM, the stocks-to-usage ratio declined to 11.3% in Mar-12 (from 13.5%in Feb-12). On the overall, the meaningful drop in the stocks level to below2.00 mt is positive for CPO prices.

Tree stress effecthas just started. CPO production slumped 14% YoY to 1.21m mt in Mar-12. The decline was more severe than market expectations of a 7% to 9% drop and our expectation of a 2% drop. As highlightedearlier in our sector update report on27 Mar, we believe that the tree stress effect on oil palm trees has started.Hence, the CPO production upcycle, which has lasted for 12 months (from Mar-11to Feb-12) should have ended. In Apr-12, CPO production is likely to register aYoY production decline of about 4% to about 1.47m mt. However, our estimate mayappear too optimistic at the current juncture as the severity of tree stresseffect is still unclear. CPO prices are nonetheless likely to appreciatefurther as CPO production will be limited as tree stress effects usually lastfor 2 years.

Strong CPO exports inMar-12 likely to continue. Exports surged by 11% MoM or 132k mt in Mar-12to 1.34m mt. Among the key CPO consumers, the highest growth was seen in Pakistan(+125% MoM to 78k mt), Europe (+63% MoM to 174k mt) and India (+11% MoM to 120kmt). The strengthening CPO exports to Pakistan were probably caused by a normalisationprocess as the Feb-12 number was extremely low (due to transporters' strike in thecountry causing closure of the factories). The strong CPO export trend islikely to continue in April, judging from the cargo surveyor's estimate of an 8% CPO export growth to 479k mt in the first 10 days ofApril. The resilient CPO demand should support CPO prices in 2Q12.

USDA WASDE reportbullish for CPO prices. In thelatest World Agriculture Supply and Demand Estimates report released on 10 Apr,USDA has reduced its 2011/12 season global soybean oil inventory by 0.17m mt or6.2% from its previous forecast to only 2.56m mt. As a result, the 2011/12season global soybean oil stock-to-usage ratio declined by 41pp to 6.08% fromlast month's estimate of 6.49%. Soybean oil production from South America has meanwhilebeen severely affected by bad weathers. Argentina soybean oil productionforecast has been reduced by 0.13m mt or 1.7% to 7.30m mt while Brazil soybeanoil production has been cut by 0.11m mt or 1.6% to 6.81m mt. CPO prices will benefit from this as it is usually used as a substitutefor soybean oil.

Source: Kenanga

April 9, 2012

IOI Corporation (Hold; TP: RM4.85) - Lack of Immediate Re-rating Catalyst

Stock Name: IOICORP
Company Name: IOI CORPORATION BHD

Research House: HLG

Price Call: HOLD

Target Price: 4.85

IOI Corporation (Hold; TP: RM4.85)

Lack of Immediate Re-rating Catalyst

Management is optimistic on CPO prices and feels there is still room forCPO price to go up further before peak production cycle comes in, backed byrelatively stable demand outlook and current supply constraint. Given itsoptimistic view on CPO price trend, management revealed that it only locked ina minimal amount of its projected output as forward sales.
Despite facing higher fertilizer cost and potentially higher labourcosts (should the government implement minimum wage policy), managementhighlighted that this will unlikely affect its production cost significantlydue to prudent cost management.
Profitability at the downstream segment will likely remain compressed inthe near term, due to the revision in tax structure for palm products by theIndonesian government that impairs the cost competitiveness of refineries in Malaysia.
No intention to re-list its property division within the next twelvemonths. However, it doesn't discount the possibility of doing so over thelonger term, once its venture in Singapore property market bearsmeaningful fruits.
Earnings forecasts and SOP-derived TP maintained at RM4.85. MaintainHold.

Source: HLIB Research - 9 April 2012

March 28, 2012

IOI Corporation (IOI MK, SELL, FV RM5.38, Last Close: RM5.37)

Stock Name: IOICORP
Company Name: IOI CORPORATION BHD

Research House: OSK

Price Call: SELL

Target Price: 5.38

THE BUZZ

According to Channel News Asia, Indonesian plantationcompany Bumitama Agri lodged its prospectus with the Monetary Authority ofSingapore on Monday for listing on the Singapore Exchange. The IPO could raiseas much as SGD200m, which will be used for new planting. Indonesia's HaritaGroup and palm oil firm IOI Malaysia are two of Bumitama's controllingshareholders.

Separately, The Edge reported that IOI Corp is set to make apaper gain of USD226m from the dilution of its stake from 36.0% to 30.4%.

OUR TAKE

We understandthat Bumitama has a nucleus planted area of about 90kha, with an weighted average tree ageof about 5 years old. While we do not doubt Bumitama's IPO could do well givenits impressive list of cornerstone investors, we do not think the IPO will haveany positive impact on IOI Corp's stock price. This is because the offering will be priced at around 11-12x PE compared to IOI's own PE of around16x.

Bumitama is poised toshow strong production growth given its abundant newly matured areas, which will see fresh fruit bunch (FFB) production accelerate in the next 5'6 years.However, we do believe that the yield drag factor will be quite significant and could undermine its near-term profitability.Hence, investors buying into Bumitama's IPO will need to take a longer terminvestment horizon. Bumitama's young tree age profile nicely complements IOI'saging tree profile. Hence, if IOI were to raise its stake in Bumitama fromone-third to above 50%, it could be very positive for IOI's stock price as thiswill significantly boost its FFB production growth going forward.

We are maintaining our Sell call on IOI in view of its rich valuation relative to otherpurer and bigger plantation names, most of which can be bought at the low teensCY12 PE. We also do not think the market will be excited about the USD226mone-off gain arising from the deemed disposal in Bumitama.

Source: OSK188

March 27, 2012

IOI Corp: Associate Bumitama to list on SGX

Stock Name: IOICORP
Company Name: IOI CORPORATION BHD

Research House: ECMLIBRA

Price Call: HOLD

Target Price: 4.64

IOI Corp Bhd (IOI MK, Hold, TP: RM4.64) is set to register at least US$226m (RM696m) or a 360% gain - on paper - from its investment in Indonesia-based Bumitama Agri Ltd. The latter has just filed for an IPO on the Singapore Exchange (SGX), which is said to fetch a market capitalisation of between S$1.2bn and S$1.3bn (RM2.9bn and RM3.2bn). According to a filing with Bursa Malaysia, IOI acquired a 33% stake in PT Bumitama Gunajaya Agro (BGA) in 2007 for US$62.6m. Its holdings shall be diluted to 30.4% upon completion of the IPO, according to Bumitama's prospectus filed with the Monetary Authority of Singapore. (Financial Daily)

Comment: According to sources with knowledge of the matter, Bumitama posted revenue of US$319.5m and net profits of US$85.3m for its FYE 31 Dec 2011. This values the company at 14x PE, which is in line with our valuation of IOI at 14x PE. Therefore at IPO pricing, there is no impact to our valuation, but we will see after shares start trading. Trading is slated to start during the week of 9 April. IOI's 30% stake in Bumitama would equate to net profits of US$28.2m (RM84.6m), representing half of IOI's FY11 associate profits of RM170.7m. (Aris Sharif)

Source: ECM Newz Bits 27 March 2012

March 2, 2012

Buy IOI Corp shares: JF Apex

Stock Name: IOICORP
Company Name: IOI CORPORATION BHD

Research House: JF APEX

Price Call: BUY

Target Price: 5.95

IOI Corporation's manufacturing segment is expected to contribute more than 80 per cent of the group's bottomline in financial year 2012, says JF Apex Securities.

In a research note today, it said IOI's revenue contribution from resource-based manufacturing segment has increased to 80 per cent in 2011 against 77.6 per cent in 2010.

JF Apex recommended a "buy" call with a target price of RM5.95 based on 17 times financial year 2013 price earning ratio (PER).

"Being a large cap planter, we think the current share price is undervalued as it is trading at 15 times financial year 2013 PER," it added. -- Bernama

February 24, 2012

IOI Corporation: Maintain Hold - No surprises

Stock Name: IOICORP
Company Name: IOI CORPORATION BHD

Research House: MAYBANK

Price Call: HOLD

Target Price: 5.33

A slightly improved quarter. 2QFY12 net profit more than doubled QoQ (+124%) to RM578m (+11% YoY). Excluding exceptionals, core net profit was RM533m (+5% QoQ, +18% YoY), within expectations. We raise our FY12-14 net profit forecasts by 4.5-6.4% to reflect a higher CPO ASP assumption of RM2,800/t (+7.7%; from RM2,600/t) for 2012-13, on poorer South American crop prospects. Despite our raised earnings, IOI remains a Hold. Our new TP is RM5.33 (+4%), based on 16x CY13 PER (previously RM5.14 on 16x FY13 PER).

Maybank Research - 24 Feb 2012

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IOICORP - Upside surprise from manufacturing

Stock Name: IOICORP
Company Name: IOI CORPORATION BHD

Research House: HWANGDBS

Price Call: HOLD

Target Price: 5.50

IOI Corporation; Hold; RM5.33
Price Target: RM5.50; IOI MK

Excluding translation FX gains and fair value changes, 2QFY12 profit (RM534.7m) beat our expectations. Stripping out fair value losses from derivatives contracts, Manufacturing profit grew 12.5% q-o-q; Plantations profit fell 17% on seasonally lower FFB output. Declared 7 sen DPS, payable on 29 March. Maintain Hold call and RM5.50 TP.

Source: HwangDBS Research 24 Feb 2012