TA Research adjusted its earnings forecasts on FGV for FY24 to FY26 upwards by 41.5% to 124.5%.
PETALING JAYA: Analysts are mostly positive about FGV Holdings Bhd
’s earnings and have raised their estimates for its future results.
The group’s latest financial results for the third quarter ended Sep 30, 2024, (3Q24) saw FGV posting a net profit of RM87.16mil with basic earnings per share of 2.39 sen.
Its revenue increased to RM6.18bil compared with RM4.91bil in 3Q23.
Cumulatively, the group recorded a net profit of RM160.05mil and revenue of RM16.24bil. Its basic earnings per share for the nine months up to September (9M24) was 4.39 sen.
Commenting on the results, Hong Leong Investment Bank Research (HLIB Research) said FGV’s results exceeded expectations at 124.5% to 253.9% of consensus and its own full-year estimates, respectively, mainly due to improvement in fresh fruit bunch (FFB) production and yield.
HLIB Research noted that the group’s core net profit jumped to RM208.4mil in 3Q24, on a yearly basis, thanks to significantly improved plantation earnings.
This was driven by a 20% increase in FFB output, lower crude palm oil (CPO) production costs, improvements in the research and development segment, as well as higher margins and sales volume in its fertiliser business.
Its year-to-date core net profit surged to RM253.5mil year-on-year, boosted by higher FFB output and oil extraction rates, as well as lower CPO production cost at the plantation division.
Lower losses at its sugar division and an improved performance at its logistics and support division were also reasons behind the higher core net profit.
This led HLIB Research to raise its financial year 2024 (FY24), FY25, and FY26 core net profit forecasts by 239%, 166% and 101%, respectively, mainly to reflect higher CPO price assumptions in FY24, FY25 and FY26, a revision of the windfall-profit levy in Malaysia, and lower CPO production-cost assumptions.
TA Research adjusted its earnings forecasts on FGV for FY24 to FY26 upwards by 41.5% to 124.5%, attributing the adjustment to FGV’s better-than-expected 9M24 results, better margins and higher contribution from the oils and fats division.
TA Research expects FFB production to increase largely due to improved harvesting following the resolution of labour shortages.
“However, we believe the current high CPO prices are unsustainable and may be impacted by a large soybean harvest in the United States and South America in 2025.
HLIB Research and TA Research have “neutral” calls on FGV, with target prices of RM1.29 and RM1.25, respectively.
