PETALING JAYA: SD Guthrie Bhd is expected to post a stronger growth in the second half of 2024 (2H24) on seasonally higher fresh fruit bunch (FFB) output.
This momentum trend is also likely to be supported by steady average selling prices and resilient downstream margin in the plantation sector.
Among the brokerages with a bullish outlook for the company are Maybank Investment Bank (Maybank IB) Research and CGS International (CGSI) Research, which are recommending “buy” and “add”, respectively.
In its report, Maybank IB Research said SD Guthrie’s 1H24 FFB output, which increased 8% year-on-year, represented 44% of its full-year forecast for the plantation giant, putting the group on track to meet its 2024 FFB growth estimate for the group.
“SD Guthrie is likely to post stronger earnings in 2H24 on better output and lower cost.
“We are keeping our earnings forecasts pending its briefing,” said the brokerage, which has a target price (TP) of RM4.96 for SD Guthrie.
Similarly, CGSI Research said it expects SD Guthrie’s net profit to be higher in 2H24 on stronger production and crude palm oil (CPO) price sustained at a high level.
“Based on our assumption of a 60% dividend payout for 2024, we expect a higher dividend of 7.8 sen per share for 2H24,” it said.
SD Guthrie declared an interim dividend of 4.65 sen per share on the back of a net profit of RM626mil, or 9.10 sen per share, for 1H24, up from RM449mil, or 6.50 sen per share in 1H23. For the period in review, the company’s revenue rose to RM9.3bil from RM8.4bil in 1H23.
“We like SD Guthrie for its recovering FFB yield in FY24 to FY25, especially from its Malaysia operations,” CGSI Research said.
“We are also positive on its plan to monetise its non-core and non-strategic assets,” it added, in reference to SD Guthrie’s proposed joint venture with TH Properties to develop a Halal Malaysia-certified managed industrial park at its existing estate in SD Guthrie’s Bukit Pelandok estate in Negri Sembilan.
Maybank IB Research noted the proposed development project would become the next phase of techpark@enstek.
“Positioned within the Malaysian Vision Valley 2.0 economic corridor, the estimated market value of land for the development in Bukit Pelandok estate is above RM220mil or RM10.88 per sq ft,” it said.
