PETALING JAYA: Kenanga Investment Bank Bhd has nudged its financial year 2023 (FY2023) net profit forecast for FGV Holdings Bhd up by 6% following the plantation group’s better-than-expected performance last year.
The bank projected FGV to record a net profit of RM869.4 million for FY2023 and RM772.5 million for FY2024.
In the financial year ended Dec 31, 2022 (FY2022), its net profit rose 12.82% to RM1.32 billion from RM1.17 billion in the previous year, while revenue surged to RM25.56 billion from RM19.57 billion previously.
“FGV’s FY2022 results exceeded expectations thanks to higher fresh fruit bunches (FFB) output, firmer crude palm oil (CPO) price as well as contained cost which offset losses from the sugar unit as well as provisions.
“Nevertheless, with upstream margins facing compression, earnings are likely to ease,” Kenanga said.
Going forward, the bank said lower palm oil prices are expected for 2023 as edible oil supply improves.
It projected CPO prices to be firmly range-bound as edible oil demand is expected to recover as post-Covid demand continues to normalise after buying was postponed by high prices last year, and China, a top edible oil market, has begun relaxing its zero-Covid policy.
Additionally, demand for biodiesel also looks supportive and likely to grow, led by the US, Indonesia and Brazil, it said.
“We are keeping FY2023/FY2024 CPO price (forecasts) for FGV at RM3,800 and RM3,500 per tonne, respectively,” it said.
Kenanga noted that FGV’s subsidiary, refined sugar producer MSM Malaysia Holdings Bhd, has sought higher retail price ceiling of RM2.85 per kg from the government to curb further losses. However, approval is likely only after Hari Raya Aidilfitri, or possibly in the second half of the year.
The bank has maintained its target price for FGV at RM1.40 per share as well as the “market perform” rating.
As at 10.44am, FGV shares on Bursa Malaysia increased by one sen to RM1.46, with a total of 562,400 shares changing hands.