KUALA LUMPUR (June 9): Boustead Plantations Bhd hogged the limelight in the morning trade on Friday (June 9), as the counter rose as much as 21.09% or 13.5 sen to 77.5 sen, with brisk trading.

Boustead Plantations was among the top gainers (by value) on Bursa Malaysia. At noon break, the counter pared some gains at 75.5 sen, still up 17.97% or 11.5 sen, bringing it a market capitalisation of RM1.69 billion. Some 14.39 million units were traded so far — more than four times its 200-day average volume of 3.33 million shares.

Year to date, the counter has rallied 20% or 12.5 sen, from 63 sen on Jan 3 this year.

Compared to a year ago, however,  the stock has gone down by 19% from 93 sen.

When contacted, Rakuten Trade Sdn Bhd equity research vice-president Thong Pak Leng said investors flocked to Boustead Plantation as an “undervalued” stock, as the counter is trading at a price-earnings ratio (PER) of 10 times.

Boustead Plantations’ net profit tumbled 98.8% to RM5.22 million or 0.23 sen per share for the first quarter ended March 31, 2023 (1QFY2023), due to a significant drop in palm product prices and the adverse impact of fresh fruit bunches (FFB) valuation.

In comparison, the group posted a net profit of RM435.16 million or 19.43 sen per share for 1QFY2022, on the back of an RM364.1 million gain from the disposal of 664 hectares of plantation land in Johor.

It had declared a first interim dividend of one sen per share, to be paid on June 23.

Commenting on Boustead Plantations’ latest earnings, BIMB Securities Research analyst Noorhayati Maamor said the group’s profit after tax and minority interests (Patami) of RM5.2 million was below the research house’s and consensus expectations, accounting for only 4% and 5% of their full-year earnings forecast respectively.

Looking ahead, it is anticipated that core earnings will experience further decline in the second half of the year, due to an expected decrease in palm products price, on the back of rising cost, Noorhayati added. 

In view of the current challenging business outlook, the research house lowered its FY2023 and FY2024 earnings forecast to RM56 million and RM32 million respectively, from RM119 million and RM47 million previously.

In FY2022, Boustead Plantations posted an annual net profit of RM595.31 million, more than double the RM241.29 million posted in FY2021, thanks to gains from land disposals.

Following the the company’s earnings, Noorhayati downgraded BIMB Securities’ recommendation for Boustead Plantations to “sell”, from “hold” previously, as well as trimmed its target price to 65 sen, from 69 sen.  

“Hence, we advise investors to take any stock price rally as an opportunity to lock-in their profit,” Noohayati added.