BIMB SECURITIES RESEARCH

MARKET INSIGHT
PP16795/03/2013(031743)

Wednesday, 30 May, 2012

Result Review

IJM Plantations
Below
Stock Data
Bloomberg Ticker Market Cap (RM'mn) Issued shares (mn) 52-week high 52-week low 3-mth avg daily volume ('00) Free Float Shariah Compliant IJMP MK 2,405 802 3.42 2.38 4,665 30.97 Y Altman Z-score 4.58 YTD price chg 6.38 YTD KLCI chg 2.26 Beta 0.76 Major Shareholders IJM Corp Bhd 55.11% EPF 13.08% Schroder 2.06% 1mth (8.54) (8.39) 2012 648.9 590.4 216.5 215.2 157.3 19.62 10.00 3.33 1.64 15.29 36.66% 36.46% 25.00% 11.61% 9.20% N. Cash 12.80% 16.62% 13.24% 9.81% 6.88% 2013E 659.0 620.2 235.3 230.7 172.6 21.53 10.50 3.50 1.75 13.93 37.94% 37.19% 25.00% 11.95% 8.75% N. Cash 1.57% 5.04% 8.03% 4.82% 9.74% 3mth (10.45) (10.20) 2014E 750.9 645.3 241.6 235.0 175.9 21.94 11.00 3.67 1.86 13.67 37.43% 36.42% 25.00% 11.47% 8.43% N. Cash 13.94% 4.05% 2.66% 1.90% 1.90% 12mth 9.05 4.88 2015E 896.1 700.2 260.7 252.7 189.1 23.59 11.50 3.83 1.98 12.72 37.23% 36.08% 25.00% 11.63% 8.63% N. Cash 19.34% 8.50% 7.92% 7.50% 7.50%

Buy
Price: RM3.00 Target: (+16.7%)RM3.50 Price: IJM Plantations FY12 revenue of RM590.4m is a 16.6%
increase from FY11. Aligned with higher revenue, net profit rose at a slower 6.9% to RM157.3m mainly attributed to the RM11.0m impairment loss occurred in 4QFY12. Full year earnings accounted less than 90.0% of our forecast. As such, we are revising downward our earnings estimates by 15.4% and 8.7% for FY13 and FY14 respectively. As a result, our target price is lowered to RM3.50. Still a Buy. Impacted by impairment loss. Despite the encouraging 36.0% y-o-y growth in revenue for 4QFY12, IJM Plantations earnings were hit by the RM11.0m impairment loss from the co-generation plant and higher field upkeep maintenance. Net profit plunged 72.7% to RM7.1m. Excluding the impact of impairment loss, net profit is still 30.3% below 4QFY11s net profit of RM25.9m. Record full year revenue, but... For FY12, IJM Plantations registered revenue of RM590.4m, which is 16.6% higher than RM506.3m achieved in FY11. Aligned with the revenue growth, net profit increased 6.9% to RM157.3m from RM147.2m previously. The Group attributed the improvement to higher FFB production and favourable commodity prices. FY11 FY12 Change 575.2 648.9 12.8% 2,760.0 3,049.0 10.5% 4,259.0 4,102.0 -3.7%

Record revenue but lagging profits

Share Performance (%)

Absolute vs. KLCI

Financial Highlights
FYE 31 Mar FFB Prod. ('000 mt) Turnover EBIT Pretax profit Net Profit EPS (sen) Gross DPS (sen) Div Yield (%) NTA/share (RM) PE Ratio EBIT Margin Pretax Margin Effective tax rate ROE ROA Net Gearing (x) 2011 575.2 506.3 191.2 196.0 147.2 18.37 8.00 2.67 1.52 16.33 37.76% 38.72% 24.91% 11.71% 10.18% N. Cash -4.87% 24.47% 68.77% 74.03% 85.18%

Growth Ratios
FFB Turnover EBIT Pretax profit Net profit

FFB prod. (000mt) CPO Price (RM/mt) PKO Price (RM/mt)

Share Price Chart

3.5 3.3 3.1 2.9 2.7 2.5 2.3 Jun-11 Jul-11 Nov-11 Jan-12 May-11

Forecast. FY12 net profit of RM157.3m accounted for only 83.6% of our forecast. Without the impairment loss, it is still below our full year forecast of RM188.2m. In view of this, we have revised down our earnings estimates by 15.4% and 8.6% for FY13 and FY14 respectively. 10 sen dividend. The Board has declared a single tier rd dividend of 10 sen/share for FY12 which is payable on 3 th July 2012 and will trade ex-dividend on 13 June 2012. View and Valuation. Subsequent to the earnings downgrade, we have cut our target price to RM3.50 (from RM4.00 previously) which was derived based on a 3-year average P/E ratio of 16.2x on a rolling 12 months EPS of 21.5sen. Still a Buy.

Dec-11

Ng Keat Yung nkyung@bimbsec.com.my 03-26918887 ext 181

Mar-12

Sep-11

Aug-11

Feb-12

Apr-12

Oct-11

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30 May 2012

Result Review: IJM Plantations 4QFY12

Quarterly figures
FYE 31 Mar (RM'm) Revenue EBIT Pretax profit Taxation Minority interest Net Profit EPS (sen) Net gearing (x) EBIT margin (%) PBT margin (%) Net margin (%) Effective tax rate (%) Mar-11 99.0 32.7 32.7 -6.8 0.0 25.9 3.23 N. Cash 33.07 33.07 26.19 20.81 Jun-11 128.4 66.4 66.4 -16.9 -0.0 49.5 6.17 N. Cash 51.72 51.72 38.55 25.41 Sep-11 180.9 62.9 62.9 -15.9 -0.1 46.9 5.85 N. Cash 34.75 34.75 25.91 25.25 Dec-11 146.4 68.5 71.6 -17.7 -0.0 53.9 6.72 N. Cash 46.75 48.87 36.80 24.67 Mar-12 134.7 15.7 14.4 -7.42 0.1 7.1 0.88 N. Cash 11.62 10.71 5.25 51.47 QoQ YoY Chg 12MFY11 12MFY12 -8.0 36.1 506.3 590.4 Chg -77.1 -52.2 196.0 213.4 -79.8 -55.9 196.02 215.25 -57.9 9.0 -48.82 -57.82 -560.0 3,350.0 -0.0 -0.1 -86.9 -72.7 147.2 157.3 -86.9 -72.8 18.37 19.62 N/A N/A N. Cash N. Cash -75.2 -64.9 38.72 36.14 -78.1 -67.6 38.72 36.46 -85.7 -80.0 29.07 26.64 108.6 147.3 24.91 26.86 YTD Chg 16.6 8.9 9.8 18.4 NM 6.9 6.8 N/A -6.7 -5.8 -8.4 7.9

Source: BIMB Securities

Income Statement
FYE 31 Mar (RM'm) Revenue EBITDA Pretax profit Tax MI Net profit Net profit growth (%) EPS (sen) EPS growth (%) Gross DPS (sen) Dividend yield (%) NTA/share (RM) Net gearing (x) PER (x) P / NTA (x) ROE (%) ROA (%) 2010 406.7 148.5 112.6 (33.0) (0.2) 79.5 -35.5 11.0 -36.2 5.0 1.67 1.43 N. Cash 27.25 2.10 7.80 6.54 2011 506.3 215.4 196.0 (48.8) (0.0) 147.2 85.2 18.4 66.8 8.0 2.67 1.52 N. Cash 16.33 1.97 11.71 10.18 2012 590.4 243.3 215.2 (57.8) (0.1) 157.3 6.9 19.6 6.8 10.0 3.33 1.64 N. Cash 15.29 1.83 11.61 9.20 2013E 620.2 291.4 230.7 (57.7) (0.3) 172.6 9.7 21.5 9.7 10.5 3.50 1.75 N. Cash 13.93 1.71 11.95 8.75 2014E 645.3 303.8 235.0 (58.8) (0.4) 175.9 1.9 21.9 1.9 11.0 3.67 1.86 N. Cash 13.67 1.61 11.47 8.43 2015E 700.2 324.8 252.7 (63.2) (0.4) 189.1 7.5 23.6 7.5 11.5 3.83 1.98 N. Cash 12.72 1.51 11.63 8.63

Source: BIMB Securities

Balance Sheet
FYE 31 Mar (RM'm) Current assets Non-current assets Total Assets Current liabilities Non-current liabilities Shareholders' fund Minority interest Equity & liabilities 2010 309.0 1,078.4 1,387.5 42.8 139.0 1,203.9 1.6 1,387.5 2011 297.4 1,206.9 1,504.3 45.6 150.4 1,306.0 2.3 1,504.3 2012 417.2 1,425.0 1,842.3 80.1 374.1 1,383.9 4.2 1,842.3 2013E 584.8 1,445.9 2,030.8 74.2 464.7 1,489.3 2.7 2,030.8 2014E 590.3 1,552.4 2,142.6 72.3 490.5 1,577.0 2.9 2,142.6 2015E 681.6 1,556.9 2,238.5 69.9 491.7 1,673.9 3.1 2,238.5

Source: BIMB Securities

www.bimbsec.com.my

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30 May 2012
DEFINITION OF RATINGS BIMB Securities uses the following rating system:

Result Review: IJM Plantations 4QFY12

STOCK RECOMMENDATION BUY Total return (price appreciation plus dividend yield) is expected to exceed 10% in the next 12 months OUTPERFORM The stock is expected to perform ahead of the market in the next 12 months TRADING BUY The stock is expected to outperform the market in the next 3 months NEUTRAL The stock is expected to perform in line with the market in the next 12 months TRADING SELL The stock is expected to underperform the market in the next 3 months SELL An expected price depreciation of more than 10% in the next 12 months SECTOR RECOMMENDATION OVERWEIGHT The Industry as defined by the analysts coverage universe, is expected to outperform the relevant primary market index over the next 12 months NEUTRAL The Industry as defined by the analysts coverage universe, is expected to perform in line with the relevant primary market index over the next 12 months UNDERWEIGHT The Industry as defined by the analysts coverage universe, is expected to underperform the relevant primary market index over the next 12 months Applicability of ratings The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment ratings are only applicable to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not carry investment ratings as we do not actively follow developments in these companies. Disclaimer The investments discussed or recommended in this report not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of BIMB Securities SdnBhd may from time to time have a position in or either the securities mentioned herein. Members of the BIMB Group and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgements as of this and are subject to change without notice. BIMB Securities SdnBhd accepts no liability for any direct, indirect or consequential loss arising from use of this report.

Published by

BIMB SECURITIES SDN BHD (290163-X) A Participating Organisation of Bursa Malaysia Securities Berhad Level 32, Menara Multi Purpose, Capital Square, No. 8 Jalan Munshi Abdullah, 50100 Kuala Lumpur Tel: 03-2691 8887, Fax: 03-2691 1262 http://www.bimbsec.com.my

Kenny Yee Head of Research

www.bimbsec.com.my

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