KLK, GENP lead plantation share decline on weak industry sentiment

-A +A

KUALA LUMPUR (Nov 20): Kuala Lumpur Kepong Bhd (KLK), Genting Plantations Bhd (GENP) and IOI Corp Bhd fell about 3% each as weaker plantation financials dented investor sentiment on the sector.

KLK fell as much as 76 sen or 3% to RM22.24, while IOI Corp declined 14 sen or 3% to its intraday low of RM4.49.

GENP dropped as much as 26 sen or 2.5% to RM10.20.

At about 3pm, KLK was traded at RM22.34, while IOI Corp changed hands at RM4.52.
GENP was transacted at RM10.24.

For comparison, the FBM KLCI fell 5.84 points or 0.32% to 1,818.40.

RHB Research Institute Sdn Bhd analyst Alvin Tai told theedgemarkets.com that the slide in plantation counters was due to poor financial results.

The poor financials came on falling crude palm oil (CPO) prices, according to Tai.
 
“The results of plantation firms have not been good, coupled with fallen prices of soybean oil,” he said over the telephone.
 
Oil palm and soybean are rival crops, hence, prices of these commodities tend to move in tandem.

CPO for January 2015 delivery fell to RM2,223 a tonne today. This compared to a six-month high of RM2,554 on May 23 this year.
 
KLK and IOI Corp have reported weaker financials, while GENP has yet to announce its quarterly results.

KLK announced that net profit dropped 34% to RM170.75 million in the fourth quarter ended September 30, 2014, from RM258.01 million a year earlier.

However, full-year net profit was higher at RM991.71 million, from RM917.74 million.

IOI Corp's net profit fell to RM176.7 million in the first quarter ended September 30, 2014, from RM301.8 million a year earlier. Revenue was lower at RM3.02 billion, compared to RM3.24 billion.

KLK, which announced its weaker results yesterday, has invited analysts downgrades after the company's full-year numbers came in below forecast.

MIDF Research analyst Nur Nadia Kamil said KLK’s full-year earnings missed MIDF's and consensus expectation by more than 10%.

“Hence, we are maintaining our neutral stance on KLK with a lower target price of RM20.04, from RM25.00 previously,” she said in a note today.

Nur Nadia has cut MIDF's FY15 earnings forecast for KLK by 19%, on uninspiring CPO prices and challenging downstream market.