KUALA LUMPUR: FGV Holdings Bhd's six-month core net profit of RM733.1 million, attributable to improvement at its plantation and logistics segments, comes largely within Affin Hwang Capital's expectations.
For the period, FGV's revenue was higher by 64.5 per cent year-on-year (YoY) to RM13.3 billion, due to higher contribution across its plantation (up 73.7 per cent), sugar (up 14.1 per cent) and logistics and others (up 6.0 per cent) divisions.
However, the sugar business was loss-making in the six-month period attributable to higher raw sugar, freight and gas costs.
"After excluding one-off items, FGV posted a core net profit of RM733.1 million versus a core net profit of RM288.4 million during the same period last year.
"The six-month period results came in largely within our expectation," Affin Hwang said in a note today.
Sequentially, FGV's second quarter (Q2) revenue increased by 26.9 per cent quarter-on-quarter (QoQ) to RM7.4 billion, while its headline pre-tax profit was up by 19.8 per cent QoQ to RM600.3 million.
"The increase in profit QoQ was mainly attributable to higher average CPO (crude palm oil) price realised for the quarter but was partially offset by losses in the sugar segment (due to high input costs) and lower profit in logistics and others division (due to impairment in receivables).
"After excluding the one-off items, FGV recorded a stronger core net profit of RM396.2 million in Q2 2022, up 17.6 per cent QoQ," it added.
Affin Hwang made no changes to FGV's 2022-2024 core earnings per share (EPS) forecasts.
"The group has been actively sourcing for local and foreign workers to ensure sufficient manpower for harvesting and crop recovery works during the anticipated higher production in the second half (2H) of 2022.
"Overall, we are cautious on the economic outlook in 2H 2022 given uncertainties amid the rising pressure of inflation and prolonged Ukraine-Russia conflict," it said.
Affin Hwang maintained its "Hold" call on FGV, with an unchanged target price of RM1.45.