Sarawak Plantation’s 2Q in line with expectations

KUCHING (Aug 27): Sarawak Plantation Bhd’s (Sarawak Plantation) second quarter of the financial year 2024 (2QFY24) results came within analysts’ expectations, with its profit driven by higher crude palm oil (CPO) average selling price (ASP), and better fresh fruit bunches (FFB) output.

In a report, the research team at MIDF Amanah Investment Bank Bhd (MIDF Research) said “On a yearly basis, Sarawak Plantation’s 2QFY24 profit after tax, amortisation (PATAMI) were stronger driven by better upstream performance with higher operating profit of RM24.1 million (up 70.8 per cent y-o-y) recorded, underpinned by higher CPO ASP (RM4,007 per tonne; up5.6 per cent y-o-y) and better FFB output (up 16.0 per cent y-o-y).”

It explained that profitability for estate jumped by double-digit growth to RM21.4 million (+75.0 per cent y-o-y), mainly attributed by the elevated average selling price CPO and palm kernel (PK) realised of RM4,007 per metric tonne (+5.6 per cent y-o-y) and RM2,253 per metric tonne (+20.7 per cent y-o-y), respectively.

Mill earnings on the other hand, contracted to RM5.0 million (-35.2 per cent y-o-y), mainly due to the lowered OER of 19.64 per cent recorded, the research team said.

Aside from that, it noted that the group recorded mixed margins, reaching 36.3 per cent (+11.1pts) and 4.2 per cent (-2.4pts) respectively, owing to the reduced all-in cost of production at approximately RM2,729 per metric tonne (compared with 2Q23: RM2,979 per metric tonne).

On the operational front, thanks to the dry weather conditions, harvestable hectarage and FFB production jumped by +11.0 and +16.0 per cent y-o-y respectively, supporting the FFB yield to be around 3.81 metric tonne/Wha, the research team said.

Additionally, external purchased remained a significant contributor, lifting the FFB processed to surge by +2.0 per cent, while OER level remained supportive at 19.64 per cent as it was somewhat affected by the past dry weather months.

All in, MIDF Research tweaked its earnings forecasts by +2.5, -17.2, and -27.3 per cent y-o-y for FY24E to FY26F, after considering new average CPO price revision of RM3,800, RM3,600, and RM3,400 per metric tonne on combination of elevated cost of production.

It maintained its ‘neutral’ call on the stock.