Positive on S’wak Oil Palms’ FY21 prospects

KUCHING: Sarawak Oil Palms Bhd (SOP) recorded its highest profit in the financial year 2020 (FY20) and as such, analysts are positive on its performance for the rest of the year in FY21 which is expected to be driven by higher crude palm oil (CPO) average selling price (ASP).

In a report, the research team at Maybank Investment Bank Bhd (Maybank IB Research) said SOP posted one of its highest core profit after tax and minority interest (PATMI) in history in FY20 at RM197 million, up 139 per cent year-on-year (y-o-y).

Positively, the FV loss will likely reverse in FY21E.

“Coupled with higher CPO ASP, we expect SOP to deliver 16 per cent earnings per share (EPS) growth for FY21E,” it opined.

It noted that SOP’s FY20 strong earnings growth was mainly driven by high palm oil products prices (RM2,779 per tonne; up 29 per cent year-on-year) and palm kernel prices (RM1,862 per tonne, up 28 per cent y-o-y) as fresh fruit bunches (FFB) output was just a tad higher (up one per cent y-o-y).

“While it is unclear how SOP’s downstream performed, we believe it would have had a small positive contribution if not for the overall FV loss on derivative FI of RM12 million in FY20.

“As for cost, we estimate SOP’s FY20 all-in operating cost of production to be slightly higher at RM1,549 per tonne (up four per cent y-o-y),” the research team said.