RHB Research maintains Market Perform on IJM Plantations (2216)

KUALA LUMPUR: RHB Research Institute is maintaining its Market Perform recommendation on IJM Plantations and raised the fair value to RM3.60 from RM3.40.
It
said on Monday the higher fair value was after the earnings revision
based on unchanged target price-to-earnings ratio (PER) of 14 times
CY13 earnings.
"We continue to highlight IJMP's sensitivity to
CPO price movements, where every RM100/tonne change in CPO price would
affect IJMP's earnings by 5%-7% per annum," it said.
RHB
Research said the highlights of IJM Plantations were the year-to-June
production decline of 37.2%; signs of recovery from July in place; CPO
pricing power was weak in 4QFY03/12 and part of 1QFY03/13, but this
should normalise.
Other factors were new planting of 7,000ha
achieved in FY03/12, lower targets for FY03/13-15; production costs
expected to rise by about 5% in FY03/13; and impairment on cogeneration
plant in 4QFY04/12 may be repeated if capacity utilisation weakens
further.