KUALA LUMPUR (July 30): Shares of Chin Teck Plantations Bhd (KL:CHINTEK) rose to their highest in nearly 15 months as investors cheered the palm oil producer's better-than-expected third-quarter results and special dividend.
Chin Teck climbed as much as 30 sen or 4% to RM7.90, its highest since May 9, 2023. At 9.20am, the stock was trading at RM7.89, giving the company a market capitalisation of RM721 million on Bursa Malaysia. Trading volume totalled 13,300 shares so far.
Core net profit for the nine months ended May 31 surged 72% year-on-year to RM60.5 million, after excluding foreign exchange gain and net fair value gain on investment securities, which made up 78% of consensus full-year estimate.
Public Investment Bank, one of only two research houses covering the stock, kept its ‘neutral’ call on Chin Teck on Tuesday, with a target price of RM8.60 based on lower valuation, citing concerns over its Indonesian operations.
The research house nevertheless said Chin Teck is backed by a strong balance sheet, sitting on a net cash of RM431 million, or RM4.71 per share, which makes up 62% of its market capitalisation. The company also has investment securities worth RM145.7 million in its books.
Shares of Chin Teck have largely lagged peers in the plantation sector amid ethnic violence since 2012 in villages near the company’s plantations in Lampung Province, Indonesia. That has affected harvesting activities, and the company could only access about half of its total planted area there.
Harvesting of the mature estates in South Sumatera has also been delayed due to the civil unrest in the island sparked by protest against a China-backed project that would displace thousands of people in the tiny island.
Chin Teck reported on Monday that its net profit nearly doubled to RM22.69 million for its third quarter ended May 31, 2024 (3QFY2024) from 3QFY2023, thanks to higher sales volumes of fresh fruit bunches, crude palm oil, and palm kernels.
For the first nine months of FY2024, net profit rose over 63% year-on-year to RM64.8 million, and the company also declared a second interim dividend of eight sen per share and a special dividend of 20 sen per share.
On its part, Chin Teck said it expects fresh fruit bunches production to increase, which would positively impact plantation profits.