KUALA LUMPUR (June 28): Shares in Kim Loong Resources Bhd (KL:KMLOONG) rose to their highest in more than a month on Friday, after the palm oil producer reported better-than-expected first-quarter results.

Kim Loong rose as much as 4.2% or nine sen to RM2.21, its highest since May 24, 2024. The stock was trading at RM2.18 at noon, valuing the plantation company at RM2.13 billion on Bursa Malaysia. Trading volume totalled 420,600 shares, nearly triple the 200-day moving average.

According to Bloomberg, three analysts have a "buy" call on the counter, with a consensus target price of RM2.58, following the announcement of the results.

For the first quarter ended April 30, 2024 (1QFY2025), the company’s net profit rose 57.1% year-on-year (y-o-y) to RM49.52 million from RM31.51 million, while revenue climbed 18.9% to RM388.39 million from RM326.69 million.

It attributed the increase in profitability to higher average selling prices and production of fresh fruit bunches (FFB) and crude palm oil (CPO).

In a research note on Friday, Apex Securities said it had pegged the price-earnings multiple of the company at 15.2 times forecasted earnings per share of 15.4 sen.

The research house anticipates higher FFB production and higher profit contributions from the renewable energy segment, due to the commissioning of biogas plants.

However, it flagged several downside risks, including changes in regulations by the European Union, volatility in local CPO demand amid an export ban in Indonesia, labour shortages, and changing weather patterns.

Meanwhile, TA Securities said it likes the counter due to its healthy balance sheet and net cash position, which offers a stable dividend yield of 5% to 6% per annum.

It also expects FFB production to grow by 5% y-o-y, after factoring in a better age profile of young palm productive areas and an ongoing replanting programme.

However, it expects the outlook for CPO prices to remain challenging, due to weak exports and demand from major destination countries, coupled with an anticipated increase in global vegetable oil supply.

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Kim Loong 1Q net profit rises to RM49.51 mil on higher FFB, CPO production