1QFY15 Results Update

Stock Name: SOP
Company Name: SARAWAK OIL PALMS BHD

Research House: NETRESEARCH

Price Call: BUY

Target Price: 6.00

4QFY14 Results Update

Stock Name: SOP
Company Name: SARAWAK OIL PALMS BHD

Research House: NETRESEARCH

Price Call: HOLD

Target Price: 6.00

3QFY14 Results Report

Stock Name: SOP
Company Name: SARAWAK OIL PALMS BHD

Research House: NETRESEARCH

Price Call: HOLD

Target Price: 6.20

SOP - 1QFY14 Results Report

Stock Name: SOP
Company Name: SARAWAK OIL PALMS BHD

Research House: NETRESEARCH

Price Call: HOLD

Target Price: 6.20

Acquisition to Compromise Bottom Line

Stock Name: SOP
Company Name: SARAWAK OIL PALMS BHD

Research House: MIDF

Price Call: SELL

Target Price: 5.90

1QFY12 Results Update

Stock Name: SOP
Company Name: SARAWAK OIL PALMS BHD

Research House: NETRESEARCH

Price Call: BUY

Target Price: 7.00

Sarawak Oil Palms: Downgrade to Hold - Going down the value chain

Stock Name: SOP
Company Name: SARAWAK OIL PALMS BHD

Research House: MAYBANK

Price Call: BUY

Target Price: 7.20

Long-term positive venture but upside narrowed; downgrade to Hold. SOP's JV to secure two tankers does not come as a surprise as logistical support is increasingly crucial as SOP grows in size and sells its palm oil regionally. This small initial capital outlay of RM7.7m has broader implications for its longer-term plan to be a sizeable, integrated plantation player. That said, its share price has risen 60% since we initiated coverage on 2 Aug 2011. We downgrade the stock to Hold given a narrowed 4% upside to our RM7.20 TP (on 13x 2013 PER).

Maybank Research - 4 April 2012

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Sarawak Oil Palms (SOP MK, NEUTRAL, FV RM7.09, Last Close: RM6.94)

Stock Name: SOP
Company Name: SARAWAK OIL PALMS BHD

Research House: OSK

Price Call: HOLD

Target Price: 7.09

THE BUZZ

Sarawak Oil Palms (SOP) has entered into a JV agreement withShin Yang Shipping (SYS) to purchase two edible oil tankers from Swee Joo at acombined cost of RM45m. SOP will hold a 45% stake in the JV company while SYSwill hold the remaining 55%.

OUR TAKE

Former Swee Jooships. The tankers bought are the two largest tankers Swee Joo has on itsstable at a capacity of 10k and 12k tonnes respectively. SOP will inject cashof RM7.7m for its 45% stake in the JV entity as well as contribute anadditional RM2.3m for working capital purposes, which is insignificant in viewof the company's RM508.4m cash pile. The RM45m price tag on the tankers will befunded through bank borrowings, of which the JV entity will gradually repaythrough funds generated from the ships' operations. We find SOP's participationin the JV not entirely uncommon, as Wilmar also owns its own ships.

First right to use.We understand that SYS, the party with the shipping expertise, will be the onerunning the JV company. What SOP will get from the arrangement is the firstright to use the tankers, with the understanding that the tankers will not befor the sole use of SOP. We also understand that SOP will not be obliged toship their oil exclusively through the JV company and that shipping ratescharged will be based on prevailing market rates. While both SOP and SYS aredirectly related to the Shin Yang Group, the management has repeatedlyemphasized that transactions will be done at arm's length.

Immaterial butoverall positive. The deal appears to be a one-off and not a diversificationattempt to extend itself into the shipping business.  Nonetheless, we think the JV should generallybenefit SOP as its Bintulu refinery comes on stream in 2QFY12. With the firstright to use arrangement, the two oil tankers will provide some guaranteed shippingcapacity for SOP's RBD palm oil to be transported to major edible oil markets likeChina and the Eastern coast of India.

Downgrade to NEUTRAL.We  believe FY13  will be an exciting year on the back of i) higheraverage CPO prices (our price assumptions are RM3,100 per tonne), ii) initial earningscontribution from its refinery, and iii) 13.2% FFB production growth, translating into 19.1% y-o-y earningsgrowth. We will thus raise our FV when we begin looking into FY13. As for nowthough, we are downgrading SOP to NEUTRAL at an unchanged FV of RM7.09, basedon 12.0x FY12 PER. The stock has done extremely well since our initiation inFebruary 2011, providing a return of 87.1% and is the best performing plantationstock within our coverage. While we continue to view the company as one with goodmanagement and strong growth potential, we think the limited upside for now no longerwarrants a BUY call.

Source: OSK188

Sarawak Oil Palms (SOP MK, FV RM7.09, Close: RM6.23)

Stock Name: SOP
Company Name: SARAWAK OIL PALMS BHD

Research House: OSK

Price Call: BUY

Target Price: 7.09

4Q Hitch Unlikely toResurfac

After SOP's share price retreated by as much as 4.3%following its poorer than expected 4QFY11 performance, we took a closer look atits results and sought management's clarification. In 4QFY11, the company washit by a lumpy refining capacity backlog in Sarawak which led to delays in CPOshipments and revenue recognition. This should, however, work to SOP'sadvantage once its refinery comes on stream in 2Q. In 4Q, it also paid outhigher performance-based employee compensation after a record year. As theseissues should clear in 1QFY12, SOP remains our Top Malaysian Plantation Buycall.

Delving into thenumbers.  SOP's 4QFY11 earnings werebelow expectations. Although 4Q revenue fell by a lower than expected 3.8%q-o-q and was 47.5% higher yo-y, the company's costs of sales jumped 12.8%q-o-q and 82.4% y-o-y, dragging down its earnings to RM43.3m (-42.8% q-o-q,-10.8% y-o-y). As both the higher than expected revenue and costs were asurprise and admittedly puzzling (CPO production  -9.3% q-oq, realized CPO price -7.0%, butrevenue was just 3.8% lower), we took a closer look at the numbers and soughtclarification from management.

Higher revenue andcost as SOP seeks suppliers. In anticipation of SOP's maiden refinerycoming on stream in 2QFY12, the company has been buying CPO from vendors to  blend with its own CPO for shipment (whichnaturally  raises  revenue as well as costs). The company'srationale was this would allow it to secure CPO suppliers for its refinerybefore it commences operation, on the understanding that a supplier who sells itsCPO to another refinery is unlikely to return to SOP when the company'srefinery starts running. CPO trading could actually intensify in 1QFY12 as SOPbuilds up its CPO supplier base. We find comfort in learning that this move didnot give rise to trading losses (SOP  infact  made a negligible RM0.1m profitfrom it).  That said, the  1QFY12 earnings should not reflect muchimpact on an absolute basis although margins would naturally narrow as SOPprogresses down the value chain. Some 30% of the company's refining capacitywill be utilized by third party CPOs.

Refining capacitybacklog. SOP sold but was unable to ship 13,000 tonnes of CPO in December2011 due a backlog in refining capacity in Sarawak. Assuming the same 4QFY11realized CPO price of RM2,943 per tonne and a 20% net profit margin, successfulshipment would have added RM7.7m to its earnings. Such issues should be resolved  once SOP's refinery in Bintulu begins operation. While Peninsular Malaysian refinersrely partly on Indonesian CPO, refineries in Sarawak have ample local productionto cater to their capacity. Contrary to its peers on the other side of theSouth China Sea, capacity underutilization at  SOP's refinery is thusunlikely to be an issue even if Indonesia's more favourable export taxstructure is taken into consideration.

Source: OSK188

Sarawak Oil Palms: Maintain Buy - Firing on all cyclinders

Stock Name: SOP
Company Name: SARAWAK OIL PALMS BHD

Research House: MAYBANK

Price Call: BUY

Target Price: 7.20

Value Buy. SOP hit the road last Thursday, sharing its two-pronged growth strategy of upstream and downstream expansion, while further tantalising investors with the potential unlocking of its Miri land for property development. SOP remains undervalued, trading at 10.8x 2013 PER with an EV/planted ha of RM42,000 (43% below peers). Our estimates have yet to account for its property earnings potential. Reiterate Buy with a TP of RM7.20 on an unchanged 13x 2013 PER.


Maybank Research 12 March 2012

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Sarawak Oil Palms: Maintain Buy - Scaling new heights

Stock Name: SOP
Company Name: SARAWAK OIL PALMS BHD

Research House: MAYBANK

Price Call: BUY

Target Price: 7.20

Record profits. RM243m 2011 net profit (+60% YoY) was within our expectations, at 99% of our full-year estimates. Going forward, SOP will manifest strong 3-year FFB CAGR of 13% from its young oil palm estates, and progress towards being an integrated palm oil producer. We raise 2012-13 net profit forecasts by 11-12% to reflect our higher CPO ASP assumption of RM2,800/t (previously RM2,600/t) due to poorer South American crop prospects. Reiterate Buy with a higher TP of RM7.20 (+11%) on unchanged 13x 2013 PER.

Maybank Research 27 Feb 2012

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SOP (FV RM7.09 - BUY) FY11 Results Review: Slowest Quarter of the Year

Stock Name: SOP
Company Name: SARAWAK OIL PALMS BHD

Research House: OSK

Price Call: BUY

Target Price: 7.09

SOP posted FY11 earnings of RM243.0m (+61.4% y-o-y) on theback of stronger FFB production (+22%) and higher realized CPO prices (+21%).While 4Q production predictably fell q-o-q due to the yearly seasonalproduction downcycle, significant cost increases saw 4Q earnings disappoint, afirst  after four consecutive quarters ofexpectation-beating results. We are nonetheless raising our FY12 forecast toRM255.9m. Maintain BUY at FV RM7.09.

Falls short. SOPregistered 4QFY11 revenue of RM313.6m (+47.5% y-o-y due to stronger productionand despite weaker palm prices,  -3.8%q-o-q on the back of both lower production and prices). 4Q earnings, meanwhile,dropped to RM43.3m (-10.8% yo-y,  -42.8%q-o-q), the worst quarter for the year. 4Q EBITDA margins contracted 13.2 ppty-o-y and 11.1 ppt q-o-q amid softer prices and higher cost. A higher effectivetax rate of 27.3% (+6.5 ppt q-o-q) also contributed to the q-o-q earningsdecline.  Full year earnings,nonetheless, recorded a 61.4% y-o-y growth to come in at RM243.0m but fell shortof  our forecasts, representing92.3%  of our estimates  but was within consensus (95.7%). Topline wasabove expectations but significant cost increases dampened earnings.

FFB production grows>20%. SOP produced 216k tonnes of FFB in 4Q (+22.4% y-o-y on maturingtrees,  -9.3% q-o-q due to the productionseasonal downcycle). Full year production was 820,997 tonnes (+21.9% y-o-y),1.1% better than our 811,741 tonnes forecast (a forecast we kept since thebeginning of 2011). CPO production, at the meantime, increased by 30.4%compared to 2010.Our expectations are for FFB production to grow by 16.1% inFY12 before rising by 13.2% in FY13 to break the 1-million-tonne mark.

Forecast revision.Despite the poorer than expected 4QFY11 numbers, we are revising our FY12earnings forecast upwards by 8.9% to RM255.9m (+5.3% y-o-y) based on i) a narrowerCPO price discount to MPOB average (from -2% to  -1%) due to its refinery comingon stream, which we think will provide SOP with better pricing power, and ii) higherpalm kernel price assumption (RM1,660 per tonne). We are introducing our FY13 earningsforecast at RM304.8m (+19.1% y-o-y), premised on a higher average CPO priceassumption of RM3,100 per tonne, 13% FFB production growth and initial earningscontribution from its refinery. Following our forecast revision, we revise ourFV to RM7.09 based on 12.0x FY12 PER. Maintain BUY.

Source: OSK188

4QFY11 Results Update

Stock Name: SOP
Company Name: SARAWAK OIL PALMS BHD

Research House: NETRESEARCH

Price Call: BUY

Target Price: 7.00

First Among Equals

Stock Name: SOP
Company Name: SARAWAK OIL PALMS BHD

Research House: OSK

Price Call: BUY

Target Price: 7.03

Stellar output growth warrants upward earnings revisions

Stock Name: SOP
Company Name: SARAWAK OIL PALMS BHD

Research House: MIDF

Price Call: HOLD

Target Price: 5.90

An Attractive Growth-Value Proposition

Stock Name: SOP
Company Name: SARAWAK OIL PALMS BHD

Research House: OSK

Price Call: BUY

Target Price: 6.51

Sarawak Oil Palms (Buy): Still early to take profit

Stock Name: SOP
Company Name: SARAWAK OIL PALMS BHD

Research House: MAYBANK

Price Call: BUY

Target Price: 6.48

Still undervalued. Recent oil palm estates transactions in East Malaysia went for as high as RM80,580/ha, yet SOP commands approximately half that value despite recent share price run up (+13% since our initiation on 2 Aug). The scarcity of investable assets and undervaluation offer an interesting M&A angle, in our view. Share price should receive further lift driven by its irresistible 2011 single digit valuation and our projected 16% FFB output CAGR (2010-13). Reiterate Buy and RM6.48 TP (13x 2013 PER).

Maybank research (2 December 2011)

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3QFY11 Results Report

Stock Name: SOP
Company Name: SARAWAK OIL PALMS BHD

Research House: NETRESEARCH

Price Call: BUY

Target Price: 5.60

Sarawak Oil Palms (Buy): Strikes again!

Stock Name: SOP
Company Name: SARAWAK OIL PALMS BHD

Research House: MAYBANK

Price Call: BUY

Target Price: 6.48

9M profits almost doubled. SOP's 9M11 net profit of RM200m (+94% YoY) outperformed our and consensus estimates. The stellar result was due to lower taxes and minority interest while EBIT was in line with our estimate. SOP continues to trade at irresistible 2011/13 single digit valuations and low EV/planted ha despite a strong 13% 3-year net profit CAGR. Reiterate Buy with an unchanged RM6.48 TP (13x 2013 PER).

Maybank research (29 November 2011)

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OSK maintains 'buy' call on SOP

Stock Name: SOP
Company Name: SARAWAK OIL PALMS BHD

Research House: OSK

Price Call: BUY

Target Price: 5.67

OSK Research continued to like Sarawak Oil Palms Bhd (SOP), which will be included in the FTSE Bursa Malaysia Mid 70 Index
from today, as it has one of the most favourable tree age profiles within their plantation universe.

SOP will be listed in the Mid 70 counters to replace EON Capital following completion of Hong Leong Bank's acquisition. The company was previously included in the FTSE Bursa Malaysia Small Cap Index.

In a investment research note today, OSK said the company saw the first half financial year 2011 fresh fruit bunch production surge 30.3 per cent year-on-year.

"SOP is also one of the few plantation companies that registered
quarter-on-quarter earnings growth in the second quarter financial year 2011 despite lower palm oil prices," it said.

Sorting the FBM Bursa Malaysia Mid 70 Index members based on their respective full market capitalisation, OSK said SOP would be the 52nd largest company on the index, with a market cap of RM1.83 billion.

OSK maintained a "buy" call on SOP and retained its fair value at RM5.67. At 11.58am, SOP added two sen to RM4.32, after opening at RM4.30. -- Bernama