Hot Stock KLK rises 1% on 1Q profit, revenue growth

by **Cals** Fri 21 Feb 2014, 01:24

Hot Stock KLK rises 1% on 1Q profit, revenue growth
Business & Markets 2014
Written by Chong Jin Hun of theedgemalaysia.com
Thursday, 20 February 2014 09:59

UALA LUMPUR (Feb 20): Kuala Lumpur Kepong Bhd (KLK) rose as much as 1% before erasing gains after the plantation group reported a 12% rise in first quarter net profit from a year earlier.

At 9.51am, KLK fell to RM23.90 as the bourse's top decliner on thin trade of 1,000 shares. The stock had earlier risen as much as 22 sen to RM24.36 among top gainers.

Yesterday, KLK reported that net profit rose 12% to RM292.68 million in the first quarter ended December 31, 2013 (1QFY14) from RM260.92 million a year earlier.

Revenue was higher at RM2.49 billion versus RM2.32 billion.

Today, Kenanga Investment Bank Bhd analyst Alan Lim Seong Chun said KLK's 1QFY14 core net profit of RM284 million was in line with Kenanga's and consensus full-year forecast.

Lim said in a note that KLK's core numbers accounted for 22% and 24% of Kenanga's and consensus estimates respectively. He said the core net profit excludes non-recurring items such as foreign exchange losses, write-downs, besides land and unquoted investment disposal gains.

"(KLK's ) Management guided for improved profit in FY14 against FY13 on better outlook in both the plantation and manufacturing divisions.

"This is in line with our forecast of 42% net earnings growth in FY14E to RM1.30b," Lim said.

Lim who maintained Kenanga's earnings forecast for KLK, also retained the target price (TP) of RM26.10 for KLK shares. This comes with an unchanged "outperform" call for the stock.

For comparison, JF Apex Securities Bhd analyst Jessica Low Jze Tieng said in a note
the firm kept its earnings forecast for KLK. JF Apex also maintained its TP of RM23.36 for the stock with a "hold" call.

Low said KLK's latest financials came in within JF Apex's and consensus forecast.

"KLK’s 1QFY14 core net profit (excluding fair value changes and gains on goodwill) of RM308.8mil (+18.4% q-o-q; +16.6% y-o-y) was within our and consensus expectations.

"We reckon that the group’s status as a sector proxy would attract investors’ interests as the group’s earnings are well poised for recovery in FY14F in tandem with upswing in CPO price," Low said.