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Higher FFB production for KLK this year
by Cals Wed 05 Feb 2014, 10:52
Higher FFB production for KLK this year
Business & Markets 2014
Written by PublicInvest Research
Wednesday, 05 February 2014 10:04
Kuala Lumpur Kepong Bhd
(Feb 4, RM23.02)
Maintain neutral at RM23.38 with a target price of RM26.26: We recently had a meeting with KLK’s investor relations representatives and came away with a firmer picture on the company’s outlook for this year.
Management guided that it could perform better than last year on the back of: (i) improved palm oil product prices; (ii) an 8% to 10% fresh fruit bunch (FFB) production growth; and (iii) steady production costs.
We are keeping our “neutral” recommendation on KLK with an unchanged target price of RM26.26 per share.
Management is projecting 8% to 10% FFB production growth this year following a 11% year-on-year (y-o-y) growth in financial year 2013 ended Sept 30 (FY13). This will translate to FFB production of 3.89 million tonnes to 3.97 million tonnes for this year, which is higher than our earlier estimate of a 6% FFB production growth.
Management also guided that the cost of production would be slightly lower than last year’s cost of RM1,300 per tonne, premised on higher production yields and lower fertiliser cost this year.
The group has allocated a similar capital expenditure for this year, approximately RM900 million. About RM450 million will be earmarked for oleochemical facilities while the remainder will go to new plantings of 5,000ha to 8,000ha in Indonesia.
The group has a total planted landbank of 193,235ha in Malaysia and Indonesia while unplanted landbank stands at 15,000ha to 18,000ha.
Given limited expansion opportunities in Indonesia, the group ventured into Papua New Guinea and Liberia in the last two years, acquiring a total landbank of 69,889ha. The average age profile of the group’s planted area is about 11 years with 88,592ha or 46% of total planted area having immature and young oil palm trees.
The group still owns about 1,556ha of freehold agricultural land in Sungai Buloh which is believed to be able to generate a further gross development value of RM16 billion to RM20 billion. — PublicInvest Research, Jan 30
This article first appeared in The Edge Financial Daily, on February 05, 2014.
Business & Markets 2014
Written by PublicInvest Research
Wednesday, 05 February 2014 10:04
Kuala Lumpur Kepong Bhd
(Feb 4, RM23.02)
Maintain neutral at RM23.38 with a target price of RM26.26: We recently had a meeting with KLK’s investor relations representatives and came away with a firmer picture on the company’s outlook for this year.
Management guided that it could perform better than last year on the back of: (i) improved palm oil product prices; (ii) an 8% to 10% fresh fruit bunch (FFB) production growth; and (iii) steady production costs.
We are keeping our “neutral” recommendation on KLK with an unchanged target price of RM26.26 per share.
Management is projecting 8% to 10% FFB production growth this year following a 11% year-on-year (y-o-y) growth in financial year 2013 ended Sept 30 (FY13). This will translate to FFB production of 3.89 million tonnes to 3.97 million tonnes for this year, which is higher than our earlier estimate of a 6% FFB production growth.
Management also guided that the cost of production would be slightly lower than last year’s cost of RM1,300 per tonne, premised on higher production yields and lower fertiliser cost this year.
The group has allocated a similar capital expenditure for this year, approximately RM900 million. About RM450 million will be earmarked for oleochemical facilities while the remainder will go to new plantings of 5,000ha to 8,000ha in Indonesia.
The group has a total planted landbank of 193,235ha in Malaysia and Indonesia while unplanted landbank stands at 15,000ha to 18,000ha.
Given limited expansion opportunities in Indonesia, the group ventured into Papua New Guinea and Liberia in the last two years, acquiring a total landbank of 69,889ha. The average age profile of the group’s planted area is about 11 years with 88,592ha or 46% of total planted area having immature and young oil palm trees.
The group still owns about 1,556ha of freehold agricultural land in Sungai Buloh which is believed to be able to generate a further gross development value of RM16 billion to RM20 billion. — PublicInvest Research, Jan 30
This article first appeared in The Edge Financial Daily, on February 05, 2014.
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