Boustead Plantations’ FY18-20E core earnings forecasts cut on lower output

KUCHING: Boustead Plantations Bhd’s ( Boustead Plantations) financial year 2018 to 2020 (FY1820E) core earnings forecasts have been cut by analysts on lower output and lower crude palm oil (CPO) average selling price (ASP), among other reasons.

According to the research arm of Maybank Investment Bank Bhd ( Maybank IB Research), Boustead Plantations’ first nine months of 2018 ( 9M18) fresh fruit bunch ( FFB) output of 660,089 metric tonnes ( MT) disappointed as it met just 65 per cent of its fullyear forecasts, which was below the 2013-2017 historical ratios of 72 per cent-75 per cent.

“Hence, we cut our FY18-20F FFB output by nine per cent for each year to 0.93 million MT0.97 million MT- 0.98 million MT respectively,” Maybank IB Research said.

It noted that this implied a four per cent decline in output for FY18, which was previously five per cent y- o-y, while conservatively projecting only a 3.5 per centone per cent growth for FY19-20 respectively.

“We cut our FY18-20Ecore earnings forecasts by 178 per cent-102 per cent- 88 per cent as we incorporated lower output, lower CPO ASP, higher depreciation and amortisation ( D& A) and higher interest expenses.

“We now expect core losses in FY18-19 versus profits previously.”

According to Maybank IB Research, for the fourth quarter of 2018 (4Q18), Boustead Plantations’ headline profits may be lifted by a one- off net disposal gain of RM116 million following a proposed disposal of a Penang land announced in January 2018 for RM136 million cash.