Johor Plantations posted a higher net profit of RM77.11mil for 3Q24.
PETALING JAYA: Johor Plantations Group is expected to maintain its strong performance in the fourth quarter of financial year 2024 (4Q24) on the back of higher product prices, says Hong Leong Investment Bank (HLIB) Research.
The research house noted that fresh fruit bunch (FFB) output is likely to register a growth of about 11% for 2024, which is expected to sustain into 2025, while crude palm oil (CPO) production costs is anticipated to stabilise at about RM2,000 per tonne for financial year 2024 (FY24) until FY25.
Johor Plantations had registered an ex-mill CPO production cost of RM1,900 per tonne in 3Q24 and brought the total nine months of FY24 CPO production cost to about RM2,000 per tonne.
Hence, this price change is expected to lift Johor Plantations’ earnings by about RM22mil per annum for every RM100 per tonne increase in CPO prices.
Additionally, the commissioning of Johor Plantations’ two additional biomethane plants is also expected to increase its gas generation capacity to 600,000 metric million British thermal units (mmbtu) per year from the current 250,000 mmbtu annually.
“Johor Plantations expects the two biomethane plants to generate earnings of RM3mil to RM4mil annually once the gestation period is over,” the research house added. HLIB Research raised its FY24, FY25 and FY26 core net profit forecasts by 11.4%, 35.7% and 20.2%, mainly to account for higher CPO price assumptions in FY24 to FY25, as well as higher FFB output assumptions.
Following the earnings revision, the research house maintained a “buy” call on Johor Plantations with a higher target price of RM1.35 per share.
On its financials, Johor Plantations had posted a higher net profit of RM77.11mil with a basic earnings per share (EPS) of 3.93 sen for 3Q24.
Its revenue had also increased to RM404.13mil, reflecting an 18.31% year-on-year increase from RM341.59mil in the same quarter of the previous year.
Its core net profit had jumped by 22.9% to RM76.1mil during the quarter, attributable to higher sales volume and realised selling prices, coupled with lower CPO production costs.
Meanwhile, for the nine months ended Sept 30, 2024 (9M24), Johor Plantations had recorded a net profit of RM176.82mil with a basic EPS of 9.02 sen. Its revenue grew to RM1.06bil in 9M24 as compared to RM861.18mil in the previous year.
Its core net profit for the period was RM172.6mil, which was aided mainly by higher sales volume of CPO and palm kernel, lower CPO production cost and finance cost.
HLIB Research stated that Johor Plantations’ results came in above expectations, accounting for 74.3% and 80.8% of consensus and its full-year estimates.
Johor Plantations declared a second interim dividend per share of 1.25 sen, bringing the total dividend year-to-date to 2.5 sen.
For the full year, HLIB Research projects a total dividend per share of 4.5 sen.
