Author: kltrader | Publish date: Wed, 20 Aug 09:41
Results undershot our and consensus forecasts, on higherthan- expected production cost per tonne.
Cut FY14 net profit forecast by 26% on lower CPO ASP and higher cost estimates. FY15-16 forecasts are unchanged.
Maintain SELL and TP of MYR1.65 on 15x 2015 PER.
Despite deferred tax gains in 2Q14 that boosted its core net profit (+157% YoY, +225% QoQ), 1H14 core net profit still underperformed on higher-than-expected cost of production per tonne (COP/t). This could be caused by: i) higher manuring cost due to delayed manuring from FY13, and ii) significant increase in mature land to 38,415ha (+17%) as 5,544ha enters 1st year harvesting.
1H14 FFB production (+6.5% YoY) was within expectation, meeting 42% of our full-year forecast and within management guidance too.
Thus, we cut our FY14 net profit forecast by 26% mainly on: i) a lower 2014 CPO ASP assumption of MYR2,500/t (-4%; previously MYR2,600/t), and ii) higher cost of production. Our FY15 and FY16 net profit forecasts and CPO ASP assumptions of MYR2,600/t are unchanged. Against a 3-year (2013-16) projected FFB output CAGR of 13%, THP is currently trading at a pricey 17.5x 2015 PER. Maintain SELL.
Source: Maybank Research - 20 Aug 2014
Cut FY14 net profit forecast by 26% on lower CPO ASP and higher cost estimates. FY15-16 forecasts are unchanged.
Maintain SELL and TP of MYR1.65 on 15x 2015 PER.
What’s New
THP’s 1H14 core net profit of MYR23.8m (+131% YoY) met 31% of our and consensus full-year forecasts.Despite deferred tax gains in 2Q14 that boosted its core net profit (+157% YoY, +225% QoQ), 1H14 core net profit still underperformed on higher-than-expected cost of production per tonne (COP/t). This could be caused by: i) higher manuring cost due to delayed manuring from FY13, and ii) significant increase in mature land to 38,415ha (+17%) as 5,544ha enters 1st year harvesting.
1H14 FFB production (+6.5% YoY) was within expectation, meeting 42% of our full-year forecast and within management guidance too.
What’s Our View
We expect 2H14 FFB production to be higher HoH as THP enters peak harvesting season; THP is confident it will meet our 2014 FFB output forecast. However, management believes its COP/t would be flattish HoH having completed just 40% of its 2014 fertilization program in 1H14. Furthermore, CPO price has weakened. We think THP’s FY14 net profit would likely undershoot our earlier forecast.Thus, we cut our FY14 net profit forecast by 26% mainly on: i) a lower 2014 CPO ASP assumption of MYR2,500/t (-4%; previously MYR2,600/t), and ii) higher cost of production. Our FY15 and FY16 net profit forecasts and CPO ASP assumptions of MYR2,600/t are unchanged. Against a 3-year (2013-16) projected FFB output CAGR of 13%, THP is currently trading at a pricey 17.5x 2015 PER. Maintain SELL.
Source: Maybank Research - 20 Aug 2014
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