KUALA LUMPUR (Feb 27): Genting Plantations Bhd’s (KL:GENP) stock jumped on Thursday to its highest in nearly two months after the palm oil producer declared a special dividend following a much better-than-expected quarter.

Shares of Genting Plantations rose as much as 6% or 31 sen to RM5.82. The stock then eased to RM5.81 at 11.20am, giving the company a market capitalisation of over RM5 billion. Trading volume totalled 232,000 shares so far.

Analysts, however, are divided on whether investors should jump into the stock. While core net profit for 2024 beat consensus estimates by nearly 20%, the outlook appears uncertain for its upstream business that accounts for nearly 90% of Genting Plantations operating profits.

Genting Plantations’ profit margin remains stable with one of the lowest production costs among its peers, said MIDF Amanah Investment Bank, which recommended a ‘buy’ call on the stock.

Further, profit margin will likely be supported at 11%-13% over the next two years by high palm oil prices, the research house said, adding that “earnings trajectory would remain supported by steady age profile and expanded mature harvestable area coming from Indonesia”.

Genting’s average selling price of crude palm oil in the final quarter of 2024 was RM4,232 per tonne, a 25% increase from the same period a year earlier.

Thursday’s gain helped cut year-to-date decline in Genting Plantations’ share price to under 2%. The stock now has six ‘buy’, six ‘hold’ and no ‘sell’ calls. The average target price is RM6.34, according to Bloomberg, suggesting a potential gain of about 9% from its last price.

For CGS International, which kept its ‘hold’ recommendation, earnings at Genting Plantations’ upstream segment may be “flat” while its downstream operations are expected to remain “challenging”.

Genting Plantations also has a property business, which “will experience the highest growth” among its businesses this year, the research house said, noting new launches from residential projects in Genting Indahpura and a mixed development in Genting Pura Kencana.

On Wednesday, the company posted a 77% year-on-year rise in net profit to RM112.05 million in the three months ended Dec 31, 2024 (4QFY2024), driven by higher palm product prices. For the full year, Genting Plantations’ net profit rose 27% to RM323.06 million.

Genting Plantations also declared a special dividend of 13 sen per share and a final dividend of four sen per share. Dividend for FY2024 totalled 25 sen per share, higher than the 21 sen declared in FY2023.

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Genting Plantations’ 4Q profit up 77% on stronger palm product prices; declares 17 sen dividend