Apex Securities Research said a large portion of KLR’s mature oil palm trees is expected to sustain its revenue growth going forward.
KUALA LUMPUR: Kim Loong Resources Bhd
’s (KLR) fresh fruit bunch (FFB) production yields are expected to remain strong on a good mix in the age of its oil palm trees.
KLR’s oil palm tree age profile consists of 89% of mature trees and 11% of immature trees as of the end of last year.
According to Apex Securities Research, a large portion of KLR’s mature oil palm trees is expected to sustain its revenue growth going forward.
The company expects to achieve a year-on-year FFB production growth of 15% in the financial year 2024.
This would be driven by mature planted palm oil land of 14,300ha and 21.5 tonnes per ha of FFB yield coupled with better yield profiles of young mature palms.
Meanwhile, its milling operation is expected to help shield the company from weaknesses or fluctuation in the price of crude palm oil (CPO) as it contributes to over 97% of the company’s total revenue, said Apex Research.
“Despite the gradual decline in CPO prices, KLR continues to generate steady income through its milling operations. Most of its FFB are sold to its milling business, thus cushioning the impact of the lower CPO price on its plantation segment,” it said.Apex Research said it is positive on KLR’s earnings growth prospects given its prudent management while it has also been delivering consistent performance in recent years.
“We initiate coverage on KLR with a “hold” call with a target price of RM1.84, based on a 14.2 times 2025 forecast price to earnings ratio,” it said.
