KL Kepong slips to low of RM21.36 as quarterly profit drops

By Nadya Ngui

KUALA LUMPUR: Shares of Kuala Lumpur Kepong Bhd
fell to a low of RM21.36 at midday on Thursday after its earnings fell
2.4% to RM209.6mil from a year ago and expected the weaker crude palm
oil prices to weigh on its profits for the current financial year ending
Sept 30, 2013.
At 12.30pm, it was down 26 sen to RM21.44. There were 260,400 shares traded between RM21.36 and RM21.62.
The share price had on Wednesday fallen 44 sen to RM21.30.
At
midday, the FBM KLCI was down 4.26 points or 0.24% to 1,779.62.
Turnover was 888.93 million shares valued at RM1.06bil. There were 252
gainers, 476 losers and 249 counters unchanged. KL Kepong's earnings
slipped 2.4% to RM209.6mil in the second quarter ended March 31, 2013
from RM214.9mil a year ago due to the challenging phase in its
plantation sector. Revenue fell 14.8% to RM2.235bil from RM2.624bil a
year ago. Earnings per share were 19.7 sen compared with 20.20 sen. It
declared an interim dividend of 15 sen a share. Pressure on palm
product prices has been further compounded by the recent high levels of
stocks in both Indonesia and Malaysia, resulting in a substantial
reduction to the current palm oil price level of RM2,300 a tonne.
"In
view of the prevailing palm products prices, the group's plantations
profit will be much lower than that of the previous financial year," it
said.
KLK said it expected lower profit for the current financial year as compared to that of the previous financial year.
Maybank
KE Research said KLK's second quarter core net profit of RM210mil (down
20% on-quarter, down 2% on-year) met 24% and 19% of the research house
and consensus full year estimates.
"The manufacturing and
property segments delivered better-than-expected results while
plantations' contributions were weak but within our expectation. We
raise our FY13 earnings by 7% on higher downstream margins and stronger
property earnings.
"Trading at a forward price-to-earnings ratio
(PER) of 21 times, valuations are stretched. KL Kepong stays a Sell with
an unchanged target price of RM19.40 on 19 times FY9/14 PER, pegged at
its five-year historical mean," said Maybank Research.