Kumpulan Fima Bhd
(May 27, RM1.98)
Maintain neutral with unchanged target price of RM2.26. Kumpulan Fima (KFima) registered revenue of RM545 million, for the financial year ended March (FY15) which met 97% of our forecast.

Top line increased by 8% year-on-year (y-o-y) while all segments recorded encouraging growth.

Manufacturing revenue recorded a jump of 10.3% y-o-y to RM266.5 million for FY15, although the FY15 profit before tax (PBT) level was lower by 20.6% y-o-y at RM50.5 million.

This is mainly due to its product mix of high and low margins. We expect the division to remain stable with relatively flat growth for the near term, while KFima continues with its current contracts.

Plantations saw a positive 4.7% y-o-y revenue growth for FY15 to RM115.7 million, attributed to both higher volume and selling price of crude palm oil (CPO).

We are expecting the division to grow further, with contributions coming in from its greenfield estate in Miri, Sarawak, where the first harvest is targeted to be in mid-July this year.

Bulking recorded higher revenue of 4.7% y-o-y to RM66.8 million. On PBT level, bulking saw a 2.1% increase, also contributed by sales mix and higher contributions from edible oil and chemical oil sub-segments.

We expect this division to remain stable in the near term, albeit slow, as the division provides highly customised and specialised services, while depending mainly on securing short-term contracts and long-term deals.

Its food division’s FY15 revenue increased by 8.9% y-o-y, indicating the strong potential growth the division holds.

Going forward, we expect the food division to contribute a higher percentage to the group’s total sales, as the division fine-tunes its restructuring of focus in growing its tuna sales as opposed to its initial  intention of mackerel.

At the moment, mackerel contributes 70% to the division, and the group intends to reduce it to 30% in the medium term, replacing mackerel with tuna. — Public Investment Bank Bhd, May 27

This article first appeared in The Edge Financial Daily, on May 28, 2015.