Friday, 9 March 2012

Affin upgrades Sarawak Plantation Bhd to ADD, fair value raised to RM3.18

KUALA LUMPUR (March 9) : Affin Investment Bank Bhd has revised upwards its fair value for Sarawak PLANTATION [] Bhd shares from RM2.67 to RM3.18 and upgraded its recommendation for the stock from Reduce to Add. The stock closed at RM3 on Thursday.

In a note on Friday, Affin said the upward revision is in tandem with the research house’s move to raise its net profit forecast for Sarawak Plantation by between 19.1% and 26.2% for FY12 to FY14 period. Affin said the higher earnings forecast is based on the company’s higher fresh fruit bunch (FFB) growth assumptions and cost of production of between RM1,500 and RM1,600 a tonne and crude palm oil average selling prices of RM3,000 a tonne during the three year period.

“Based on latest management guidance, FFB production growth is now projected at 23% in FY12 and 14% in FY13 compared to our assumption of 12% and 8%, espectively,” Affin said.

The research house also said Sarawak Plantation’s forecast dividend payout offers an attractive net dividend yield of 5.4%.

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