Thursday 28 Mar 2024
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KUALA LUMPUR (March 2): Kuala Lumpur Kepong Bhd's (KLK) share price rose to its all-time high on Wednesday (March 2) as investors expect the company to deliver a strong set of earnings on the back of soaring crude palm oil (CPO) prices.

KLK was the day's top gainer on Bursa Malaysia, closing RM1.36 or 5.22% firmer at RM27.40 after hitting an intraday high of RM28.70.

The counter has gained RM5.62 or 25.8% over the last two months, from RM21.78 at the end of December.

Trading volume also swelled to 10.5 million shares on Wednesday compared with 2.53 million on Tuesday.

KLK saw its net profit surge 67.69% to RM599.32 million for the first quarter ended Dec 31, 2021 (1QFY22), from RM357.41 million a year earlier, boosted by the strong CPO prices.

Quarterly revenue surged 58.82% to RM6.83 billion from RM4.3 billion.

The group said its plantation division's profit more than doubled to RM607.9 million from RM239 million in 1QFY21, on the back of significantly higher CPO and palm kernel (PK) prices as well as recognised profit from newly acquired subsidiaries.

"The CPO price surged 50.3% year-on-year to RM4,063 per tonne from RM2,703, while the PK price jumped 66.9% to RM2,864 per tonne from RM1,716," it reported.

In a note dated Feb 17, Kenanga Research said KLK's 1QFY22 core net profit was within expectations, at 25% of the research house's full-year estimate, and 23% of consensus estimate.

Kenanga Research said although palm oil prices should ease over the next two to three months, edible oils and fats supply for 2022 would probably stay tighter than projected on poorer South American soyabean harvest.

Hence, it said elevated CPO prices were expected to stay longer than earlier anticipated.

"Consequently, we are nudging up our recently upgraded CPO price assumptions of RM3,800 for FY22 to RM4,000 per tonne and from RM3,100 to RM3,500 for FY23. However, the stronger CPO price assumptions are offset by higher-than-expected fertiliser costs, notably potash and nitrogen," it added.

Kenanga Research maintained its "outperform" recommendation and target price of RM30 for KLK.

Edited ByS Kanagaraju
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