The Daily Pulse of Bursa Malaysia

Hap Seng Plantations back on the groove

zaclim
Publish date: Mon, 11 Mar 2024, 08:31 AM
zaclim
0 191
Daily Pulse is a blog that provides daily stock updates and insights on the Bursa Malaysia.

Follow us in telegram for more daily discussion
https://t.me/xifuinvcommunity

Much like most plantations companies, Hap Seng Plantations Holdings Bhd appears to be back on investors’ radar. The counter has seen high trading volume sending it to a rising momentum, creeping up to the year high of RM2.06.

Fundamentally, analysts are positive on the counter as crude palm oil (CPO) prices are expected to stay firm at RM4,000 per tonne in FY24.

With strong CPO prices, the plantation outfit can register higher revenue as it hopes to achieve a fresh fruit bunches (FFB) production growth of 10% in FY24.

Thankfully, Hap Seng Plantations has not experienced adverse weather conditions in its oil palm estates in Sabah.

The increase in FFB output in FY24 is expected to be underpinned by enhancements in FFB yields. Its FFB yield is expected to be 21.9 tonnes/ha in FY24 compared with 19.7 tonnes/ha in the previous year. While yield is anticipated to increase, cost of production is expected to decline to RM2,200/tonne in FY24. This is on the back of lower fertiliser costs and a higher volume of production.

In FY23, the production costs was RM2,562/tonne, which was slightly higher than RM2,559/tonne in FY22. Higher costs of upkeep and wages were compensated by the strong growth in FFB production in FY23. Meanwhile, Hap Seng Plantations is expected to replant 923ha of ageing oil palm trees in FY24 compared to 829ha in FY23.

However, investors may be concerned over its latest results. On a full financial year basis, Hap Seng Plantations posted lower net profit of RM91.4 million compared with RM210.3 million. This was on the back of lower revenue of RM667.8 million versus RM814.6 million.

The company was affected by lower average selling price of all palm products but mitigated by higher sales volume of CPO and palm kernel. It also saw lower loss from fair value adjustments of biological assets of RM8.1 million as compared to RM29.2 million in the preceding year.

In addition, the group’s PBT and PAT in the preceding year also included a gain of RM18.8 million and RM26.5 million respectively arising from the completion of disposal of assets held for sale.

Despite the poorer full year results, analysts believe the counter deserves a premium as its FFB output growth is one of the highest in Malaysia. Furthermore, it is currently trading at a decent FY24 PE of 12x vs. its 2-year peak of 16x, hence there is room for investors to make some gains in the near term.

Related Stocks
More articles on The Daily Pulse of Bursa Malaysia
PMB Tech on the uptrend after hitting a low in October

Created by zaclim | Nov 07, 2024

PMB Technology Bhd seemed to be rebounding from its recent low in October. What are the factors that will catalyse its share price further?

Luck appears to be on Magnum Bhd’s side

Created by zaclim | Nov 06, 2024

Magnum Bhd is likely to show more upside in its share price, not only from a number of positive factors but its hidden gem in U Mobile. How high can the counter rise?

Takaful Malaysia on the uptrend after hitting a low in March

Created by zaclim | Nov 04, 2024

Syarikat Takaful Malaysia Keluarga has not been impressively in terms of share price movement. BUt there are opportunities to buy into the recent dip as the counters appear to be heading north.

Innoprise seeing new highs on elevated CPO prices

Created by zaclim | Nov 04, 2024

Global demand for palm oil remains resilient, particularly in key markets such as India, China and Pakistan.

Plantations outfit TDM rides on healthcare biz

Created by zaclim | Nov 01, 2024

TDM Bhd saw heightened interest in April following a RM5.7bil disposal of Ramsay Sime Darby Health Care, as valuations of private hospital operators in Malaysia was at a new benchmark.

UWC back on investors radar as it banks on expansion

Created by zaclim | Oct 30, 2024

UWC Bhd has lost much ground after touching a year high of RM3.83 last year. The counter has since seen its share price climbing and may just continue its upward momentum.

EP Manufacturing’s diversification may be a game changer

Created by zaclim | Oct 29, 2024

EP Manufacturing Bhd (EPMB) share price has been languishing in the past year, crashing to year low of 58 sen early September. With its move into vehicle assembly, will this help arrest its decline?

Wasco back into action, can it go higher?

Created by zaclim | Oct 28, 2024

Wasco Bhd touched a year high of RM1.60 in May but succumbed to profit taking, pushing the counter downwards. However, things are looking up for the oil & gas services provider.

Multiple catalytic boost to Agmo seen in the near term

Created by zaclim | Oct 24, 2024

Agmo Holdings Bhd has been garnering strong shareholders interest given its exposure to e-invoicing and clean energy businesses. This should provide impetus for the counter to trend higher

Taking a bet on Genting Malaysia will yield positive outcome

Created by zaclim | Oct 24, 2024

GenM should benefit from expected rise in footfall to its casino and resort.

Discussions
Be the first to like this. Showing 0 of 0 comments

Post a Comment