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 HSPLANT 5138 HAP SENG PLANTATIONS HOLDINGS BERHAD posted better Q1 positive eanings due to higher-than-expected palm product prices

CGS-CIMB Research said HSP achieved average CPO and PK selling prices grew by 56 per cent and 82 per cent YoY to RM6,019 and RM4,702 per tonne Q1.

KUALA LUMPUR: Hap Seng Plantations Holdings Bhd's (HSP) net profit for the first quarter (Q1) ended June 30, 2022, of RM66.4 million came above expectations, making up 37 per cent and 31 per cent of CGS-CIMB Research and Bloomberg consensus forecasts.

CGS-CIMB Research said this was due mainly to higher average selling prices (ASPs) for its palm products and higher sales volume.

"The better-than-expected results were due mainly to higher-than-expected palm product prices.

"The reported net profit for Q1 FY23 was much higher at RM102 million due to fair value gain of biological assets of RM8.7 million, a net gain of RM11 million arising from the sale of 623.7 hectares of estates for RM84.9 million, as well as a RM15.5 million reversal of deferred tax arising from the disposal," it said in a note.

HSP posted a 2.1x-fold year-on-year (YoY) rise in its Q1 FY23 pre-tax earnings due to a combination of higher crude palm oil (CPO) and palm kernel (PK) prices as well as increased fresh fruit bunch FFB output (+5.0 per cent).

CGS-CIMB Research said HSP achieved average CPO and PK selling prices grew by 56 per cent and 82 per cent YoY to RM6,019 and RM4,702 per tonne Q1.

"This was broadly in line with the Malaysian Palm Oil Board's (MPOB) average Q1 2022 CPO price of RM6,050 per tonne as HSP sold most of its CPO on a spot basis.

"The company also benefitted from a sharp jump in CPO sales volumes of 28 per cent YoY, higher than its CPO output growth of six per cent, which we attribute to favourable inventory movements as the group had some delivery delays from the previous quarter," it added.

CGS-CIMB Research raised HSP's FY22-FY23 net profit forecasts by 32-74 per cent to reflect higher CPO prices, which are offset by elevated operating costs.

The research firm has downgraded HSP to "Hold" with a higher target price of RM2.81, as it viewed the sharp CPO price rally baked into its valuations at this juncture.

https://www.nst.com.my/business/2022/08/826311/hap-seng-plantations-posted-better-q1-positive-eanings-due-higher-expected

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