KL Kepong's first-half profit meets Kenanga Research's expectations

KUALA LUMPUR: Kuala Lumpur Kepong Bhd's (KLK) core net profit m of RM567 million for the first half of financial year 2021 (1HFY21) is broadly within Kenanga Research's forecast at 56 per cent, due to better downstream segment.

Fresh fruit bunches (FFB) wise, Kenanga Research said the production of 1.87 million tonnes in 1HFY21 accounted for 46 per cent of its full-year estimate. 

An interim dividend of 20.0 sen was declared, as expected, the firm said in a report today.

Kenanga Research said KLK's 1HFY21 core net profit rose 58 per cent, driven by higher plantation segmental profit on higher crude palm oil (CPO) prices and manufacturing segment's profit due to better performance in Malaysia, China and Europe. 

The firm expects KLK's upstream to improve on higher CPO price and production recovery.

"However, we think the impact could be dampened as full benefits of higher CPO price will be capped by Indonesia's upstream operations, and downstream consumption patterns could be affected during Malaysia's Movement Control Order 3.0."

Kenanga Research raised its financial years 2021-2022 earnings forecast by 13.0-7.0 per cent on KLK and maintained "Outperform" call with a lower target price of RM25.10

"Risks to our call are sharp decline in CPO prices and significant rise in fertiliser/transportation costs," it said.

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