PETALING JAYA: Kim Loong Resources Bhd
, which posted an 18.9% year-on-year (y-o-y) growth in its bottom line for the first half of its financial year 2025 (1H25), may see a weaker performance in the 2H25 due to softer crude palm oil (CPO) prices.
TA Research noted that Kim Loong’s net profit of RM89.02mil accounted for 58% of its full-year estimate and 55% of consensus forecasts.
“We consider these results to be in line with expectations as we anticipate softer palm oil prices in the 2H25,” it noted.
During the 1H25, the average CPO selling price rose 4.5% y-o-y to RM4,087 per tonne.
However, TA Research said the outlook for CPO prices remains challenging due to weaker exports, lower demand from major importing countries and an expected increase in global vegetable oil supply.
Kim Loong anticipates a moderate fresh fruit bunches (FFB) production growth of 5% in FY25 ending Jan 31, following a 15% increase in FY24, supported by the improved age profile of young palms and ongoing replanting efforts.
The Johor-based oil palm planter and CPO miller aims to replant 1,000 ha in FY25, up from 350 ha in FY24.
In its milling operations, Kim Loong expects to process 1.6 million tonnes of FFB in FY25, with CPO prices projected to remain around RM4,000 per tonne.
For the second quarter ended July 31, 2024 (2Q25), Kim Loong reported an 8.9% decline to its net profit, falling to RM39.5mil compared with RM43.35mil in the same quarter last year.
This was despite a 5.3% increase in revenue to RM405.94mil from RM385.61mil in 2Q24.
The lower profit was attributed to decreased earnings from its palm oil milling operations due to reduced CPO extraction rates.
TA Research maintained its “hold” call on Kim Loong with an unchanged target price of RM2.50 per share.
“We like Kim Loong due to its healthy balance sheet and net cash position, which offers stable dividend yield of between 5% and 6% per annum,” it said.
As at July 31, 2024, Kim Loong’s net cash position stood at RM222.41mil, up from RM208.21 a year ago.
