Hap Seng Plantations Holdings Berhad

$HSPLANT / 5138 (HAP SENG PLANTATIONS HOLDINGS BERHAD)
Research by Kenanga

$HSPLANT / 5138 (HAP SENG PLANTATIONS HOLDINGS BERHAD)
Research by HLIB

$HSPLANT / 5138 (HAP SENG PLANTATIONS HOLDINGS BERHAD)
Research by CGSI

$HSPLANT / 5138 (HAP SENG PLANTATIONS HOLDINGS BERHAD)
Research by Kenanga
OUTPERFORM – TP RM2.30

"Sterling Results”

HSPLANT’s 1HFY24 core net profit doubled YoY and exceeded expectations, thanks to higher CPO and PK prices even as FFB output dipped. Likewise, 2QFY24 core results were also lifted by sturdy commodity prices and lower costs, which is expected to persist and thus we raised FY24-25 forecasts by 14% and 10%, respectively, and call to OUTPERFORM (from MARKET PERFORM) with a higher TP of RM2.30 (from RM2.00).

Analyst:
Khoo Teng Chuan
khootc@kenanga.com.my

$HSPLANT / 5138 (HAP SENG PLANTATIONS HOLDINGS BERHAD)
Research by HLIB
BUY – TP RM2.21

"Broadly within”

HSP’s 1H24 core net profit of RM56.7m (+59.8%) came in broadly within our expectation, at 49.2%/52.3% of our/consensus full-year estimate. Core net profit of RM56.7m in 1H24 was arrived after adjusting for (i) RM0.3m PPE written off, and (ii) RM7.8m fair value gain on biological assets. Maintain earnings forecasts, TP of RM2.21 based on unchanged 15x FY25 core EPS of 14.7 sen, and BUY rating.

Analyst:
Chye Wen Fei
wfchye@hlib.hongleong.com.my

$HSPLANT / 5138 (HAP SENG PLANTATIONS HOLDINGS BERHAD)
Research by APEX
HOLD– TP RM 1.79

"Stellar performance”

• Hap Seng Plantations recorded CNP of RM32.1m (+136.3% yoy, +32.8% qoq) in 2QFY24, bringing 1HF24 CNP to RM56.3m (+62.9% yoy), which was above ours and consensus’ expectations, accounting for 54% and 51% of forecasts respectively.
• We kept our earnings forecast unchanged in anticipation of softer CPOprices outlook.
• Downgrade to HOLD recommendation with a lower TP of RM1.79 based on 12.9x PE (from 13.4x) on FY25F EPS. Our lower P/E assumption is based on weaker earnings growth going forward due to our weaker CPO price assumptions.

Analyst:
Steven Chong
stevenchong@apexsecurities.com.my

$HSPLANT / 5138 (HAP SENG PLANTATIONS HOLDINGS BERHAD)

PLANTATION
$IOICORP / 1961 (IOI CORPORATION BERHAD) $HSPLANT / 5138 (HAP SENG PLANTATIONS HOLDINGS BERHAD)
Research by HLIB
Neutral

“Highest stockpile level since Feb-24”

Palm oil stockpile remained on an uptrend, rising by 4.3% MoM to 1.83m tonnes in Jun-24, as the slump in exports more than offset lower production. The uptrend in palm oil stockpile will likely continue into Jul-24, on the back of the continuation of seasonal uptick in cropping pattern will likely offset potential higher exports demand arising from palm’s improved price competitiveness against soyoil and the absence of festive-driven demand.

Analyst(s):
Chye Wen Fei
wfchye@hlib.hongleong.com.my

$HSPLANT / 5138 (HAP SENG PLANTATIONS HOLDINGS BERHAD)
Research by Kenanga
Market Perform - TP RM2.00

"Buoyed by Lower Production Cost"

HSPLANT’s 1QFY24 results met our expectation but disappointed the market. Its 1QFY24 core net profit rose 6% YoY as lower production cost and better palm kernel prices more than offset weak CPO prices and FFB production. We maintain our forecasts, TP of RM2.00 and MARKET PERFORM call.

Analyst:
Teh Kian Yeong
tehky@kenanga.com.my

PLANTATION
$IOICORP / 1961 (IOI CORPORATION BERHAD) $HSPLANT / 5138 (HAP SENG PLANTATIONS HOLDINGS BERHAD)
Research by HLIB
Neutral

“Mildly higher stockpile”

Palm oil stock level increased for the second consecutive month (albeit marginally), by 0.5% MOM to 1.75m ton in May-24, as higher exports and domestic consumption were more than offset by seasonally higher production. The uptrend in palm oil stockpile will likely continue into Jun-24, on the back of the continuation of seasonal uptick in cropping pattern, palm’s weak price competitiveness over competing oils, and the absence of festive -driven demand.

Analyst(s):
CHYE Wen Fei
wfchye@hlib.hongleong.com.my

MONTHLY PRODUCTION FIGURES (MINING / PLANTATION / TIMBER)

$HSPLANT / 5138 (HAP SENG PLANTATIONS HOLDINGS BERHAD)
Research by Kenanga
Market Perform – TP RM2.00

“Better FFB Harvest Expected"

HSPLANT guided for flat but firm CPO price of RM4,000/MT and easier production cost which correspond with our assumptions. We maintain our forecasts but raise our FY24-25F NDPS forecasts from 7 sen to 8 sen. We maintain our TP of RM2.00 and MARKET PERFORM call.

Analyst:
Teh Kian Yeong
tehky@kenanga.com.my

$HSPLANT / 5138 (HAP SENG PLANTATIONS HOLDINGS BERHAD)
Research by Kenanga
Market Perform – TP RM2.00

“Buoyed by Lower Production Cost"

HSPLANT’s 1QFY24 results met our expectation but disappointed the market. Its 1QFY24 core net profit rose 6% YoY as lower production cost and better palm kernel prices more than offset weak CPO prices and FFB production. We maintain our forecasts, TP of RM2.00 and MARKET PERFORM call.

Analyst:
Teh Kian Yeong
tehky@kenanga.com.my

$HSPLANT / 5138 (HAP SENG PLANTATIONS HOLDINGS BERHAD)
Research by HLIB
Buy – TP RM2.16

“FFB output recovery in subsequent quarters"

HSP’s 1Q24 core net profit of RM24.5m (-41.5% QoQ; +12.2% YoY) accounted for 21.3-22.2% of consensus and our full-year estimates. We consider the results within expectations, as we expect FFB output to come in stronger in subsequent quarters. We raise our FY24 core net profit forecast by 4.7%, while leaving FY25-26 largely unchanged, as we recalibrated our valuation parameters following the release of latest annual report. Post earnings adjustment, we maintain our BUY rating on HSP with a higher TP of RM2.16 (from RM2.06 earlier) based on 15x revised FY24 core EPS of 14.4 sen.

Analyst:
Chye Wen Fei
wfchye@hlib.hongleong.com.my

$HSPLANT / 5138 (HAP SENG PLANTATIONS HOLDINGS BERHAD)
Research by Apex
Hold – TP RM1.93

“Dampened by lower sales volume"

• 1QFY24 core net profit at RM24.2m was well within our and consensus expectation.
• Reported flattish topline led by a decline in CPO and PK sales volumes, which offsets gains from the improved ASP of both products.
• We maintain our HOLD recommendation with a target price of RM1.93 by pegging PE multiple of 13.4x to FY24F EPS of RM0.14.

Analyst:
Steven Chong
stevenchong@apexsecurities.com.my

General Meetings: Outcome of Meeting

Quarterly rpt on consolidated results for the financial period ended 31/03/2024

MATERIAL LITIGATIONHAP SENG PLANTATIONS HOLDINGS BERHAD ("HSP" or the "Company")
- Consolidated Hap Seng Plantations (River Estates) Sdn Bhd ("RESB") Kota Kinabalu High Court ("KKHC") Suit Civil Suit no. BKI-22NCvC-39/4-2016 between RESB against (1) Excess Interpoint Sdn Bhd; and (2) Heng Chin Hing @ Wong Chin Hing and KKHC Suit Civil Suit no. BKI-24-127/5-2012 between RESB against Chee Ah Nun @ Sia Yi Chan

PLANTATION
$IOICORP / 1961 (IOI CORPORATION BERHAD) $HSPLANT / 5138 (HAP SENG PLANTATIONS HOLDINGS BERHAD)
Research by HLIB
Neutral

“1Q24 results preview”

During 1Q24, 4 out of 7 planters under our coverage registered lower FFB output (namely FGV, HSP, IOI, and TSH), while KLK and SDPL registered respectable YoY FFB output growth of 8.3-8.5%. Planters with higher exposure in Indonesia likely fared better than those in Malaysia (particularly those with heavier exposure in Sabah), due to rains in Sabah during Jan-Feb. Performance at downstream segment likely weakened on a YoY basis, due to high base effect SPLY and weak near-term demand prospects.

Analyst(s):
CHYE Wen Fei
wfchye@hlib.hongleong.com.my

MONTHLY PRODUCTION FIGURES (MINING / PLANTATION / TIMBER)

Part A - Circular to Shareholders in relation to the Proposed Renewal of and New Shareholders' Mandate for Recurrent Related Party Transaction & Part B - Share Buy-back Statement in relation to the Proposed Renewal of Share Buy-back Authority

Annual Report & CG Report - 2023

General Meetings: Notice of Meeting

MATERIAL LITIGATIONHAP SENG PLANTATIONS HOLDINGS BERHAD ("HSP" or the "Company")
- Consolidated Hap Seng Plantations (River Estates) Sdn Bhd ("RESB") Kota Kinabalu High Court ("KKHC") Suit Civil Suit no. BKI-22NCvC-39/4-2016 between RESB against (1) Excess Interpoint Sdn Bhd; and (2) Heng Chin Hing @ Wong Chin Hing and KKHC Suit Civil Suit no. BKI-24-127/5-2012 between RESB against Chee Ah Nun @ Sia Yi Chan

OTHERSHap Seng Plantations Holdings Berhad ("HSP" or the "Company")
1) Proposed renewal of and new shareholders mandate for recurrent related party transactions of a revenue or trading nature ("Proposed RRPTs Mandate"); and
2) Proposed renewal of authority for the Company to purchase its own shares ("Proposed Renewal of Share Buy-back Authority")
(Collectively referred to as the "Proposals")

MONTHLY PRODUCTION FIGURES (MINING / PLANTATION / TIMBER)

DISCLOSURE ON QUARTERLY PRODUCTION

PLANTATION
$IOICORP / 1961 (IOI CORPORATION BERHAD) $HSPLANT / 5138 (HAP SENG PLANTATIONS HOLDINGS BERHAD) $FGV / 5222 (FGV HOLDINGS BERHAD) $GENP / 2291 (GENTING PLANTATIONS BERHAD) $KLK / 2445 (KUALA LUMPUR KEPONG BERHAD)
Research by HLIB
Neutral (Maintain)

“USDA 2024 prospective planting”

USDA’s prospective planting report indicated that US farmers intend to plant 90m acres of corn (-4.9% vs. 2023’s planted acreage) and 86.5m acres of soybean (+3.5% vs. 2023’s planted acreage). The shift towards more soybean over corn areas is possibly due to downtrend in corn prices amid ample global supplies and sluggish demand for US exports. The latest planting intention for soybean, coupled with the 9% YoY increase in USDA’s soybean inventory signals sufficient soybean supply in coming marketing year, hence capping near-term prices of soybean and CPO. Prospective planting aside, palm’s narrowed price discount against soy oil, impending seasonal palm output recovery, and the absence of notable demand-push catalyst indicate that current high palm price will not sustain over the longer term. As such, we maintain our 2024-25 CPO price assumptions of RM4,000/tonne and RM3,800/tonne, and reiterate our NEUTRAL stance on the sector. For exposure, our top picks are IOI (BUY; TP: RM4.66) and HSP (BUY; TP: RM2.06).

Analyst(s):
Chye Wen Fei
wfchye@hlib.hongleong.com.my

PLANTATION
$IOICORP / 1961 (IOI CORPORATION BERHAD) $KLK / 2445 (KUALA LUMPUR KEPONG BERHAD) $SIMEPLT / 5285 (SIME DARBY PLANTATION BERHAD) $GENP / 2291 (GENTING PLANTATIONS BERHAD) $HSPLANT / 5138 (HAP SENG PLANTATIONS HOLDINGS BERHAD)
Research by Kenanga
Neutral

“4QCY23 Results Review: Downstream the Culprit”

The plantation sector ended CY23 on a muted tone. None of the big three integrated players – SIMEPLNT, IOI and KLK - met our forecasts as their downstream earnings disappointed. Looking ahead, we expect upstream to remain the key earnings driver for CY24 with downstream potentially contributing more meaningfully in CY25. Maintain NEUTRAL as the sector is supported by a PBV of only 1.2x but argument for a strong upside catalyst is still not compelling. We continue to like those with ability or flexibility to expand such as PPB (OP; TP: RM18.50) and TSH (OP; TP: RM1.30).

Analyst(s):
Teh Kian Yeong
tehky@kenanga.com.my

MONTHLY PRODUCTION FIGURES (MINING / PLANTATION / TIMBER)