KUALA LUMPUR (Aug 25): IOI Corp Bhd’s share price rose as much as 11 sen or 2.83% to RM4 this morning after the oil palm plantation company reported a significant net profit rise to RM1.39 billion for the financial year ended June 30, 2021 (FY21) from RM600.9 million a year earlier.
The company also declared an interim dividend of six sen a share.
At 10.37am today, IOI Corp’s share price had pared some gains at RM3.99, still up 10 sen or 2.57%.
PublicInvest Research analyst Chong Hoe Leong said in a note today that IOI Corp ended FY21 with an impressive earnings growth of 84% year-on-year (y-o-y) to RM1.4 billion, buoyed by both its plantation and resource-based manufacturing segments.
“The sterling results made up 118% and 111% of ours and the street expectations respectively,” he said.
Nevertheless, he made no changes to the research house's FY22 to FY24 earnings forecasts for IOI Corp as he expects to see weaker resource-based manufacturing earnings for the group, dragged by more competitive refining and oleochemical margins as well as slower demand.
He maintained the research house's "neutral" call on the group, with an unchanged target price (TP) of RM4.41.
Meanwhile, MIDF Research said in a note today that while IOI Corp's FY21 earnings met its expectations, it surpassed the consensus.
“We made no adjustments to our forward earnings as the FY21 financial results were in line with our expectations. We leave our earnings estimates for FY22 and FY23 unchanged at RM1.11 billion and RM1.1 billion respectively,” it said.
MIDF also noted that the group’s upstream segment is expected to continue to shine as crude palm oil (CPO) prices are expected to be sustained above RM3,000 per metric ton level at least until the third quarter of 2021 (3Q21) due to tight supplies, higher exports demand as well as low production.
“Nevertheless, we remain concerned over the performance of the resource-based manufacturing segment in view of a subdued contribution from the group’s oleochemical sub-segment on the back of higher CPO and palm kernel prices,” the research house said.
As for the fats sub-segment, it foresees the performance of the company's associate Bunge Loders Croklaan Group BV improving in the coming quarter given further reopening of economic activities and higher demand in North America and Europe.
“All factors considered, we maintain our 'buy' recommendation [on IOI Corp]. Our TP of RM5.08 implies an expected total return of 33.06%,” it said.