United Plantation Bhd - Earnings Within Expectations
Thu, 24-Apr-2025 06:32 am
by Steven Chong • Apex Research

Counter

UTDPLT (2089)

Target Price (RM)

21.60

Recommendation

Hold

Executive Summary

  • UPL’s 1QFY25 CNP surged +25.5% yoy and +8.7% qoq to RM201.5m, coming in broadly within our expectations, making up 25.5% of our full-year forecast.

  • Given that the reported earnings are deemed within expectations, we kept our forecast unchanged.

  • Re-iterate our HOLD recommendation with unchanged target price of RM21.60, based on 17x P/E multiple pegged to FY25F EPS of RM1.27.

 

Results within expectations. 1QFY25 CNP was within our expectations at 25.5% of our full year forecast.

 

YoY. 1QFY25 CNP rose +25.5% yoy to RM201.5m, thanks to higher CPO and PK average selling prices, which also led to better margins in the plantation segment. Similarly, revenue grew by +8.6% yoy to RM517.6m.

 

QoQ CNP rose +8.7% qoq in tandem with the higher CPO and PK ASP.  On the other hand, quarterly revenue fell -17.5% qoq, dragged by lower CPO production due to wet weather and weaker demand from the refinery segment.

 

Outlook. CPO production is currently on track, hitting 24% of our target at 267k MT. That said, we reckon global market uncertainties led by the ongoing tensions between US and China, are likely to exert pressure on CPO prices. At this stage, we are keeping our FY25 CPO price forecast unchanged at RM4,300, which is consistent with bearish outlook, driven by rising palm oil supply as production continues to recover from last year’s dry spell.

 

Earnings Revision. Given that the reported earnings are deemed within expectations, we kept our forecast unchanged. 

 

Valuation. Re-iterate our HOLD recommendation on UPL with a target price of RM21.60, by pegging 17x P/E multiple to FY25F EPS of RM1.27 and 0% ESG factored premium/discount based on three-star ESG rating. 

 

Risk. EU export ban and regulations, changing weather patterns affect FFB production, taxation and export ban in Indonesia threatens local CPO demand, shortage of labours and rising operational cost.

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