KUALA LUMPUR, Nov 19 (Bernama) -- Bursa Malaysia gave up earlier gains to end mixed today, amid a higher regional market showing, as property, construction, and healthcare counters attracted buying interests, while plantation, banking, and telecommunication stocks saw some profit-taking, an analyst said. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) eased 1.70 points to close at 1,602.34 from yesterday’s close of 1,604.04. The benchmark index, which opened 0.86 of-a-point lower at 1,603.18, moved between 1,601.02 and 1,608.88 during the trading session. However, the broader market was mixed to higher, with gainers leading decliners by 565 to 438 while 502 counters remained unchanged, 961 untraded, and 14 suspended. Turnover narrowed to 2.83 billion units valued at RM2.08 billion versus 2.96 billion units valued at RM2.23 billion yesterday. Rakuten Trade Sdn Bhd equity research vice-president Thong Pak Leng said the benchmark index remained range-bound and it required a dec
Kuala Lumpur Kepong Bhd (KL) is anticipated to post a stronger performance in the final quarter ending September 30, 2024 (4QFY2024), driven by seasonal production increases, following third-quarter results that met market expectations.
Key Highlights:
Seasonal Production Boost: Public Investment Bank Research projects that KLK will "catch up" in the final quarter, supported by a seasonally stronger production period. The research house has maintained a "neutral" rating on KLK with an unchanged sum-of-parts (SOP)-based target price (TP) of RM21.33.
Plantation Segment Outlook: The plantation segment is forecast to perform better in FY24, aided by cost-saving measures and modest yield improvements. The strong final quarter is expected to significantly contribute to KLK’s overall performance for the year.
Manufacturing Segment Variance: The manufacturing segment presents a mixed outlook, with Europe’s oleochemical market recovering due to higher demand and better margins, while challenges persist in China. The refinery segment continues to struggle with overcapacity in the region, leading to negative refining margins.
Upgraded Ratings: MIDF upgraded KLK from "neutral" to "buy" with a revised TP of RM23.42, up from RM22.00. The upgrade is based on a projected price-to-earnings ratio (PER) of 26x for FY25, reflecting a 5-year historical high. The upstream division is identified as a key catalyst, with fresh fruit bunch (FFB) and crude palm oil (CPO) yields expected to increase due to favorable weather and effective fertilizer application.
Challenges in Manufacturing: Despite a significant revenue increase in the manufacturing segment — five times higher than the plantation segment — profits were relatively low at RM57.1 million, primarily due to losses in refinery and kernel crushing operations. However, the oleo segment, particularly in Europe, has shown recovery with increased demand and improved margins, despite high utility costs.
Cautious Outlook: TA Securities downgraded KLK to "hold" with a revised TP of RM22.09, down from RM23.83. The downgrade is attributed to potential downside risks to CPO prices due to weak soybean prices, driven by an oversupply of soybeans. The manufacturing segment recorded a lower profit due to an unfavorable revenue mix, leading to a reduced gross margin.
Financial Performance: KLK’s net profit for 3QFY2024 surged by 185.6% year-on-year (y-o-y) to RM240.2 million, while revenue increased by 7.6% to RM5.5 billion. The plantation segment's profit more than doubled to RM363.4 million.
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