PETALING JAYA: After a dismal second quarter of this financial year (2Q24), Genting Plantations Bhd
is poised to see stronger second half (2H24) earnings with better oil palm fresh fruit bunch (FFB) yields, says Kenanga Research.
The research firm said the plantation company, which is majority-owned by Genting Bhd, posted poor FFB output in 1H24.“This turned around month-on-month (m-o-m) in August with a monthly fruit production of 0.189 million tonnes.
“We expect the FFB harvest to continue inching up m-o-m into September and October, possibly extending into November of this year. As such, 2H24 harvest should be 20% to 25% higher than 1H24, thanks to an upcycle in biological yields but not enough to nudge full-year FY24 FFB output to surpass meaningfully that of FY23.”
Because of this, Kenanga expects FY24 FFB harvest to stay flattish year-on-year at around 2.1 million tonnes and see yields recovering further in FY25, as the group’s Indonesian estates mature into higher yielding age brackets.
Due to seasonally higher harvest, it noted that 3Q24 crude palm oil (CPO) prices are typically weaker, averaging 8% below 2Q24 prices looking at historical trends.
“However, thus far, the average 3Q24 CPO price of RM3,989 per tonne has been essentially flat despite a stronger ringgit.
“Importantly, CPO price is likely to stay firm in 2025 as tight supply is likely to cause global edible oil inventory levels to moderate in 2025. Meanwhile, costs are expected to stay supportive of upstream margins,” added Kenanga.
Meanwhile, the contribution from the group’s maiden Premium Outlets in Jakarta is also expected to be higher on larger lettable areas. “A 1Q25 opening is still expected but the opening lettable area of the Alam Sutera outlet in Tangerang (Indonesia) is now expected to be larger.
“Judging by the design and structure, the outlet resembles a single-phase project (like the Genting Highland Premium Outlets) rather than staggered multi-phase expansion (such as the Johor Premium Outlets).
“As such, on opening, the lettable area of the Alam Sutera outlet is now estimated to be 1.5 times to two times larger than our earlier assumption, which is expected to push overall outlet contribution from 10% to 15% of net profit currently towards 20% to 30% from FY25 onwards.”
