NPC ... Dec10

KENANGA RESEARCH:
3QFY10 below expectations

-  9MFY10 net profit of RM 22.0m was below our FY10 profit forecast of RM33.3m at 67%.

- QoQ, 3QFY10 PAT a substantial lowered by 22% to RM5.2m.  Management attributes the decrease in profit before tax mainly to fishery livestock written off of RM2.9m due to high mortality of fishery livestock and the impairment loss on goodwill on consolidation of RM117,899 of the fishery segment during the quarter. 3Q’s plantation revenue was up marginally by 2.7%.

-  YoY, 9MFY10 turnover of RM282.6m increased by 23.8% due to higher FFB production from own estates and CPO price realised of RM2,500 per mt in 9M10. This is inline with the sector’s performance. But, EBIT was negatively impacted by write-off of fishery livestock in 3Q.

-  Reiterate BUY and maintain target price at RM2.96 based on our 10x PER to FY11. 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.