This article first appeared in The Edge Financial Daily on February 28, 2019

IJM Plantations Bhd
(Feb 27, RM1.74)
Maintain sell with a target price (TP) of RM1.20: After stripping out a gain in foreign exchange (forex), a gain in financial derivatives instrument and forex losses on foreign borrowings, we derived a core net loss of RM15.6 million, widening from a net loss of RM5.8 million in last quarter and net profit of RM17 million a year ago.

The quarter-on-quarter performance was dented by lower crude palm oil (CPO) prices in both Malaysian and Indonesian operations amid slower fresh fruit bunch production in its Indonesia operation.

Meanwhile, year-on-year was eroded by lower CPO and palm kernel prices in both Malaysian and Indonesian operations.

Nine-month financial year 2019 registered a core net loss of RM13.4 million, which was substantially below our and market expectations’ net profit of RM48.8 million and RM5.2 million respectively, given higher-than-expected interest cost and forex losses, albeit lower commodity prices. — JF Apex Securities, Feb 27