KMLOONG – Fundamental Analysis (4 Jul 2016)

Excel – Download the analysis file

Latest Financial – Q1 2017 Financial Report (29 Jun 2016)

FY17 Q1 Results Highlight:

  • KMLOONG recorded a higher revenue at RM177.70 million (Q1FY16: RM162.88 million) but a lower PBT at RM18.41 million (Q1FY16: RM23.23 million)
  • The revenue and net profit from plantation operations dropped by -3% and -15% YoY respectively. This was mainly caused by lower production but cushioned by better FFB price. The FFB production for Q1FY17 was 52,500 MT, +18% YoY (Q1FY16: 64,200 MT). The significant drop in production was likely caused by the El Nino phenomenon. The plantation operations did not face problem in selling its FFB production as most of the produce was supplied to mills within the Group. The average FFB price was +19% YoY.
  • Due to higher selling prices, the revenue for Q1FY17 increased by +10% YoY. However, the profit was RM8.24 million which was -25% YoY. The drop in profit was partly caused by lower OER and lower FFB intake arising from competition for crop in view of low FFB production during Q1FY17. Total CPO production for Q1FY17 was 51,400 MT, -18% YoY (Q1FY16: 62,300 MT).
  • The sale of CPO, the main product was 58,700 MT, -2% YoY (Q1FY16: 59,900 MT). The average prices of CPO was RM2,480 per MT for Q1FY17, +12% YoY.

Going Forward:

  • KMLOONG maintains high dividend yield.
  • I believe that CPO price will remain stable in 2016.
  • In FY17, an increase in FFB production from young mature area is expected but in view of the potential effects being caused by El Nino, the FFB production will be flat or slightly lower, while the CPO production could be lower, comparing to the quantity achieved in FY16.
  • In my opinion, in near term, the fair value of KMLOONG range from 3.3 to 3.5. Uncertainty risk of fair value is HIGH.
  • I will continue to hold and accumulate KMLOONG if there is a big discount.

At the time of writing, I owned shares of KMLOONG.

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