KUALA LUMPUR: SD Guthrie Bhd is anticipated to report an increased net profit in the second half of the financial year 2024 (2HFY24), fuelled by seasonally higher production and reduced fertiliser costs, according to CIMB Securities Sdn Bhd.
The firm also noted that the company might realise a gain from land sales if its venture into industrial parks successfully monetises its land.
For the second quarter financial year 2024 (2QFY24), SD Guthrie's core net profit increased by 54 per cent year-on-year (YoY) to RM425 million, mainly due to an 8 per cent YoY rise in fresh fruit bunch (FFB) production, a 7 per cent YoY increase in the achieved crude palm oil (CPO) price to RM4,029 per tonne, and stronger downstream profits.
On a quarter-on-quarter (QoQ) basis, core net profit grew by 86 per cent, driven by higher output (up 11 per cent QoQ), an improved CPO price (up 4 per cent QoQ), and a significant 86 per cent QoQ surge in downstream EBIT.
"This resulted in a first half of 2024 (1H24) core net profit of RM654 million, up 83 per cent YoY, with robust contributions from both estate and downstream operations.
"Although the 1H24 core net profit represents only 44 per cent of our full-year forecast and 47 per cent of the consensus estimate, it is largely in line with expectations, as stronger earnings are anticipated in 2H24 due to seasonally higher production," it said.
SD Guthrie announced plans yesterday to develop a HALMAS-certified Managed Industrial Park on 464 acres of prime land at its Bukit Pelandok estate in Negri Sembilan, in collaboration with TH Properties Sdn Bhd.
The land designated for development at Bukit Pelandok estate has an estimated market value exceeding RM220 million, compared to SD Guthrie's net book value (NBV) for the estate, which is 21 sen per square foot (psf).
CIMB Securities expressed a positive outlook on the development, noting that it provides SD Guthrie with an opportunity to gradually monetise the value of its strategic estate land.
"This is in line with SD Guthrie's plans to pursue opportunities in industrial park development across various states and in renewable energy, particularly solar farms," it added.
CIMB Securities has retained its 'buy' call on the palm oil producer with an unchanged target price of RM5.11 per share.