NPC ... Sep10

KENANGA RESEARCH


- 1HFY10 net profit of RM16.9m was inline with our FY10 profit forecast of RM33.3m at 50%.

- QoQ, 2QFY10 PAT a substantial lowered by 33% to RM94.6m.
Management attributed the decrease in net profit mainly due to lower FFB production by approximate 5% of 37MT (1Q: 39k MT) from own estates and resulting in lower milling margin.

- YoY, 2QFY10 turnover and EBIT increase 12.2% and 12.9% respectively mainly due to higher FFB production from own estates and CPO price realised of RM2,100 per mt in 1H. This is inline with the sector’s performance.

- Reiterate BUY and maintain target price at RM2.96 based on our 12x PER to FY10. Note that our forecast and valuation for NPC are conservative compared to other big cap planters which are already trading at CY10 PER of c.18x based on CPO price of RM2,400/MT.

9/Sept/2010 closing : RM2.00