POSITIVE OUTLOOK: OSK Research predicts that SOP’s earnings will spring back in 2013, driven by lower fertiliser costs.
KUALA LUMPUR: Sarawak Oil Palms Bhd’s (SOP) earnings will spring back in 2013, driven by lower fertiliser costs.
Besides that, a recovery in production from 2012’s depressed levels and firmer crude palms oil (CPO) prices on the back of lower stockpiles would also help the company improve its profit, OSK Research Sdn Bhd (OSK Research) said in its research note yesterday.
It said SOP outperformed its peers due to its favourable tree age profile and strong near-and medium-term production growth, as well as a management that knew how to get the most out of its trees.
“Despite industry-wide weak production in 2012, SOP’s fresh fruit bunches (FFB) production growth was one of the highest within our Malaysian coverage due to its young trees and good estate management practices.
“Our estimate is for financial year 2013 earnings to surge 38.2 per cent as CPO price averages RM 2,750 per tonne and FFB production rises to 1.05million tonnes,” the research house said.
OSK Research has retained a buy call with a fair value of RM6.77 per share. — Bernama