Analysts upbeat on United Malacca’s growth

KUCHING: Analysts remained optimistic about the earnings growth prospects of United Malacca Bhd (United Malacca).

Following a company briefing, the research arm of TA Securities Holdings Bhd (TA Research) yesterday remained optimistic about the growth prospects for the group especially for the company’s oil palm plantation estate in Indonesia.

Thus, the research firm expected the net profit of United Malacca to grow at an estimated compound annual growth rate (CAGR) of 14 per cent over the next three years, supported by new mature plantation in Indonesia and the recovery in fresh fruit bunches (FFB) production as El-Nino’s effects begin to fade.

TA Research noted the growth in FFB production of the company is expected to be higher in financial year 2017 (FY17) ending April 2017 and FY18 due to more new mature areas, especially from Indonesia.

Besides, the recovery from the impact of El Nino and favourable plantations age profile would help to boost the company’s production going forward.

In FY16, TA Research gathered that the group has a total planted land bank of 32,681 hectare (ha).

“Of out that plantation landbank, approximately 10,503 ha or 43 per cent of the 24,585ha of land bank in Indonesia has already planted with palm oil,” it highlighted in its note.

“For the existing oil palm plantation profile, total mature hectarage will increase by 4,000ha to 4,250ha in FY17. Another 3,000ha to 4,000 ha will mature in FY18.”

As a result, the company expected FFB production to increase by six to seven per cent in FY17 and 10 per cent in FY18.

Apart from that, United Malacca also plans to complete the remaining planting of 6,000 ha of landbank over the next three years.

United Malacca also has plans to diversify into other crops, with TA Research observing its joint venture (JV) with Pt Bintang Gemilang Permai (BGP) to develop 59,920ha land in Central Sulawesi will take off and the group intends to hold 60 per cent stake in the JV.