KUALA LUMPUR (Sept 3): Sime Darby Plantation Bhd's share price fell as much as 12 sen or 2.41% to RM4.86 so far today amid a broader market drop and after the company reported first-half profit, which was below market forecast.

On Friday (Aug 30), Sime Darby Plantation reported a net profit of RM27 million on revenue of RM2.88 billion for the second quarter ended June 30, 2019 (2QFY19) after the group's upstream oil palm operations registered losses due to lower crude palm oil (CPO) prices.

theedgemarkets.com, quoting Sime Darby Plantation's statement to Bursa Malaysia, reported that the group said lower profit at its downstream oil palm operations also affected its bottom line. For 1HFY19, Sime Darby Plantation said net profit stood at RM101 million on revenue of RM5.88 billion.

Today, Affin Hwang Investment Bank Bhd analyst Nadia Aquidah wrote in a note that Sime Darby Plantation's 1HFY19 core net profit, which excludes one-off items, was down 87.8% on-year at RM63 million.

"The 6M19 (1HFY19) results were below market consensus and our expectations, and the variance to our forecast was mainly due to lower-than-expected CPO prices and higher-than-expected operating costs.

"We cut our 2019-21E core EPS estimates by 17-45%, mainly to take into account lower CPO price assumptions and higher production costs. Given the earnings downgrade, we lower our DCF (discounted cash flow)-derived target price (TP) to RM4.80, and maintain HOLD rating on the stock," Nadia said.

Public Investment Bank Bhd analyst Chong Hoe Leong wrote in a note today the research house upgraded its call for Sime Darby Plantation shares to neutral with a higher TP of RM4.46 from RM4.02 previously, as Public Investment believes the that worst is over for Sime Darby Plantation.

"Despite the weaker-than-expected results, we made no changes to our earnings forecasts as we see a strong recovery in 2H given the recent recovery in CPO prices," Chong said.