KUALA LUMPUR (Nov 17): Hong Leong IB Research has maintained its “Hold” rating on IOI Corporation Bhd with a lower target price of RM4 (from RM4.04) and said the group’s QFY06/16 core net profit of RM337.7 million (+40.1% q-o-q, +40.9% y-o-y) came in line with house but above consensus expectation, accounting for 26% and 31% of house and consensus full-year forecasts. 

In a note today, the research house said better q-o-q and y-o-y performance were mainly due to the improvement in resources-based manufacturing segment while plantation segment was affected by lower CPO prices (-3.6% qoq, -6.2% yoy) despite better qoq FFB production growth of 8.9% (flat yoy).

“We are revising our FY06/16 FFB production growth forecast to 2-3% from 5-6% previously as its production in 2HFY06/16 is likely to be affected by the lagged impact from severe dry weather in Sabah.

“Maintain Hold with lower target price of RM4.00 (previous TP: RM4.04) based on SOP valuation,” it said.