If you plan to buy plantation company, AVOID.
Business & Markets 2014
Written by Ahmad Naqib Idris Adzman Shah oftheedgemalaysia.com
Monday, 25 August 2014 21:30
KUALA LUMPUR (Aug 25): Based on newsflow and corporate announcements today, stocks that will garner interest tomorrow (Aug 26) may include: FGV, Kulim, Favelle, IOI Properties, United Plantations, Boustead Holdings, UEM Sunrise, Eversendai, Encorp and plantation counters.
Felda Global Ventures Holdings Bhd’s net profit halved to RM151.9 million in the second quarter ended June 30, 2014, from RM322.7 million in the previous year’s corresponding quarter, despite posting higher revenue.
Quarterly revenue stood at RM4.08 billion, compared to RM2.99 billion in a year ago.
Despite lower earnings, the plantation group announced a single-tier interim dividend payment of six sen per share.
The group said its plantation segment, downstream segment and manufacturing, logistics and others segment, had posted higher profits for the quarter, while its sugar segment reported less profit.
FGV’s cumulative half year net profit fell to RM259.5 million from RM459.4 million in the same period the year before, while revenue rose to RM7.81 billion from RM5.67 billion.
Plantation stocks may be closely observed as palm prices were reported to be headed to its biggest annual drop since 2008, as palm oil futures fell deeper below the RM2,000 mark.
Reuters said the main factors behind the fall include financing woes in China and sluggish demand for export.
"The main bearish factors are the large crop prospects for soybean in U.S., grapeseed in Europe and sunflower seeds in Ukraine and Russia. At the same time, palm oil is heading into its peak production season.
"On top of this, some buyers from China — one of the largest importers of palm oil — are having difficulties raising financing, as banks clamp down on funding for commodities, following the Qingdao port investigation," said CIMB Research analyst Ivy Ng, as quoted by Reuters.
Kulim (Malaysia) Bhd’s net profit grew 49% y-o-y to RM98.4 million for its second quarter ended June 30, 2014, from RM66.1 million in the previous year.
Revenue for the quarter rose 3% to RM817.5 million, from RM792.3 million in the year before.
The group said its quarterly profit before tax rose to RM53.1 million, from RM29.5 million in the year before.
“The increase in profit before tax for the group was mainly due to increase in sales from crane,” said the group.
However, net profit for the six months to June 30 fell 67% y-o-y to RM136.6 million from RM411.3 million, while revenue rose to RM1.65 billion from RM1.51 billion.
Favelle Favco Bhd has more than doubled its net profit to RM26.4 million in its second quarter ended June 30, from RM11.1 million in the year before.
Revenue for the quarter grew 50% year-on-year (y-o-y) to RM248.8 million, from RM165.7 million.
For the six months to June 30, net profit rose to RM38.4 million from RM21.6 million in the preceding year, while revenue rose to RM404.8 million from RM329.3 million.
IOI Properties Group Bhd reported net profit of RM413.1 million for its second quarter (4QFY14) ended June 30, rising 363% quarter-on-quarter (q-o-q) from RM89.1 million in the immediate preceding quarter (3QFY14).
Revenue stood at RM417.2 billion in 4QFY14, up 15% from RM361.5 billion in 3QFY14.
For the financial year ended June 30, 2014, IOI Properties posted net profit of RM913.4 million, while revenue stood at RM1.45 billion.
United Plantations Bhd posted net profit of RM45.8 million for its second quarter ended June 30, 2014 (2QFY14), down 20% from RM57.1 million a year earlier.
In a filing with Bursa Malaysia, United Plantations said revenue rose to RM247.8 million from RM241.1 million. United Plantations proposed an interim special dividend of 75 sen a share for 2QFY14.
Cumulative six-month (1HFY14) net profit was 10% higher at RM133.6 million from RM121.7 million in the previous year's corresponding period. Revenue climbed to RM508.8 million from RM457.5 million.
The group said profit before tax (PBT) rose 11.8% year-on-year (y-o-y) to RM158.7 million in 1HFY14, compared to RM141.9 million a year before.
Boustead Holdings Bhd net profit for the second financial quarter ended June 30, 2014 fell 26% to RM45.3 million, from RM61.2 million a year ago.
Revenue for the quarter rose 8.2% to RM2.58 billion, from RM2.39 billion a year ago.
Net profit for the six months fell to RM112 million, from RM161.1 million in the first half of last year.
The company said its plantations division was the biggest contributor of earnings for the group, delivering a pre-tax profit of RM61.4 million for the half-year period.
In a statement today, Boustead Deputy Chairman and Group Managing Director Tan Sri Lodin Wok Kamaruddin said it had been a challenging quarter for the conglomerate, as a good number of its divisions had been affected by cyclical considerations and external pressures.
“What is crucial is that we will redouble our efforts to strengthen organic growth, as we build our prospects with our new acquisitions during the period under review,” he said.
UEM Sunrise Bhd’s net profit dropped 30.6% to RM74.5 million in the second quarter ended June 30, 2014, from RM107.3 million in the previous corresponding quarter, as property development income declined.
In a statement to Bursa Malaysia today, UEM Sunrise said revenue declined to RM447.6 million, from RM475.9 million.
UEM Sunrise said the lower profit was due to cost revision made in certain projects and lower revenue.
For the half-year (1HFY14) period, net profit fell to RM136.05 million, versus RM318.42 million in the previous corresponding period. Revenue was lower at RM849.19 million, compared to RM1.17 billion.
UEM Sunrise said it had posted lower revenue in 1HFY14, as the firm had a year earlier registered RM400 million from the sale of land in Puteri Harbour to Liberty Bridge Sdn Bhd.
Excluding the land sale, UEM Sunrise said the group’s 1HFY14 property development revenue would have risen to RM784 million, from RM689 million.
Encorp Bhd’s net profit dropped 88% year-on-year to RM1.5 million for its second quarter ended June 30, 2014, from RM12.8 million in the year before.
Revenue was also lower at RM119.1 million, compared to RM161.6 million in the previous year’s same quarter.
“The decrease in revenue was mainly due to lower sales and progress of works achieved by theProperty Division, as compared to the corresponding quarter,” said Encorp.
Cumulative net profit for the six months to June 30 was flat at RM8.9 million, while revenue for the period fell to RM212.4 million from RM233.7 million.
Eversendai Corp Bhd has bagged the Khalifa Olympic Stadium contract worth RM113 million, through its subsidiary company in Qatar.
In a press statement today, Eversendai said the group’s scope in the contract comprises re-engineering and dismantling of the existing lighting arch and ancillary steel structures, as well as engineering, supply, fabrication and construction of steel structures.
The stadium was built in 1976 and initially upgraded in 2004 for the Asian Games, it noted.
Eversendai Executive Chairman and Group Managing Director Tan Sri A K Nathan said the contract brought the amount of new contracts secured by the group to date this year to RM1.1 billion, with its current order book increasing to RM1.7 billion.