KUALA LUMPUR: Maybank Investment Bank Bhd (IB) expects Boustead Plantations Bhd's core earnings for the financial year 2023 (FY23) to be 72 per cent lower as it cuts its FY23 and FY24 earnings forecasts for the company by 56 per cent and 31 per cent, respectively.
This was done after factoring in higher unit cost assumptions and lowering its fresh fruit bunch (FFB) output by six per cent for FY23 and FY24.
"As we highlighted before, Boustead Plantation's key trading catalyst has always been more land sale given its large tract of strategic land to boost its dividend payouts," it said in a note.
The bank-backed research noted that the company's fourth quarter (Q4) 2022 headline net profit of RM87 million was boosted by RM91 million in land disposal gains.
"Excluding the net gain, its Q4 core earnings of RM5.5 million brings FY22 core earnings to RM185 million, at just 87 per cent/86 per cent of our full-year estimate/consensus," it said.
The decline was due to the much lower crude palm oil (CPO) average selling price (ASP) achieved and higher operating costs.
It also estimated Boustead Plantation's FY22 operating cost of production at RM3,424 per tonne, partly due to higher windfall profit levies and state taxes paid, which correspond to FY22's record CPO average selling price (ASP).
Maybank IB downgraded its call for the company to 'Hold' with a target price of 72 sen.