Sarawak Oil Palms posts RM 200 million profit for 9 months
November 30, 2011, WednesdayKUCHING: Sarawak Oil Palms Bhd (Sarawak Oil Palms) nine months financial year 2011 earnings of RM199.7 million came in ahead of expectations, placing the company on track to form its best production year ever.
OSK Research Sdn Bhd (OSK Research) stated in its research report, “The company’s earnings blew away estimates, accounting for 90.7 per cent and 88.2 per cent of our and consensus full-year forecasts as we had originally expected a weaker second half.”
Sarawak Oil Palms saw its revenue surge 65.4 per cent year-on-year on the back of stronger palm prices and production, leading to earnings growth of close to 100 per cent, according to the research house. It went on to explain that the company was on course to record its best production year ever, with its nine months fresh fruit bunch production jumping 21.8 per cent year-on-year to meet 74.4 per cent of OSK Research’s 811,741-tonne full-year production forecast.
While the company’s crude palm oil (CPO) sales were transacted at prices marginally below the national average in the first half of the year, its realised CPO prices for thie third quarter were actually higher than the Malaysian average.
“This suggests some degree of forward sale as Sarawak transacted prices were below the national average during the quarter,” added the report.
Going forward, the research house raised its financial year 2011 earnings forecast by 19.6 per cent to RM263.3 million as it factored in better than estimated realised palm kernel prices and higher net interest income.
Financial year 2012 income had also been revised upwards b 24.6 per cent as OSK Research upgraded its 2012 average CPO price assumption to RM3,000 per tonne from RM2,700 tonne previously.
With regards to the company’s new Bintulu refinery, the research house factored in zero earnings, predicting multiple operation hiccups and under-utilisation in the initial age of commencing operation. OSK Research thus pegged a fair value of RM6.51 per share for Sarawak Oil Palms, an increase from the previous RM5.67.