Analysts applaud Kim Loong’s record 31 pct profit rise

KUCHING (Dec 29): Analysts laud Sarawak-based Kim Loong Resources Bhd (Kim Loong) as its net profit increased by 31 per cent to RM47.97 million in the third quarter (3Q) ended Oct 31, 2023, from RM36.74 million a year earlier.

This is amid higher revenue from its plantation and palm oil milling operations.

Revenue for the quarter rose to RM448.68 million from RM402.41 million previously mainly due to a 10 per cent higher fresh fruit bunch (FFB) production, it said.

“(This was) despite a 6.0 per cent drop in the average FFB selling price for the quarter,” the company said in a filing with Bursa Malaysia on Thursday.

However, for the nine-month financial period, net profit eased to RM122.84 million compared to RM125.64 million in the previous year’s corresponding period while revenue fell to RM1.16 billion from RM1.48 billion previously.

“The drop in performance for the current financial year-to-date was mainly due to a sharp decline in both average selling prices of FFB and crude palm oil (CPO) by 27 per cent.

“However, FFB production for the current year-to-date was higher by 19 per cent compared to the corresponding period last year while CPO production was marginally lower,” it said.

Kim Loong also noted that it has carried out the replanting of 335 hectares year-to-date.

As at Oct 31, 2023, the group’s total planted area, excluding land for infrastructure, unplantable land and area under development, is 15,829 hectares.

The board has announced a special dividend of three sen per share, bringing the total dividend for the current financial year ending Jan 31, 2024 (FY24) to eight sen (FY2023: 10 sen).

AmInvestment Bank Bhd (AmInvestment Bank) maintained its buy call on Kim Loong with a higher fair value of RM2.90 per share versus RM2.20 previously.

“We have raised Kim Loong’s FY25 net profit by 32.7 per cent to account for a higher average CPO price of RM4,000 per tonne against RM3,500 originally,” it said in its notes.

“We have revised Kim Loong’s FY24 net profit upwards by eight per cent. We forecast a gross dividend per share (DPS) of 10 sen for FY24, which implies a yield of five per cent.”

Researchers with TA Securities Bhd (TA Research) said Kim Loong’s 3QFY24 results exceeded its expectations, as the deviation was mainly due to higher-than-expected margins achieved.

“Stripping out exceptional items, Kim Loong’s core net profit increased by 31.5 per cent y-o-y to RM47.2 million on the back of an 11.5 per cent rise in revenue.

“We tweak our FY24 and FY25 earnings forecast higher by 14.4 and 16.5 per cent, respectively, after factoring in the higher-than-expected 3Q results and better margins.

“We also introduce our FY26 earnings forecast of RM130.2 million.”