TSH, IOI said to have best CPO yield

PETALING JAYA: Malaysian plantation companies TSH Resources Bhd and IOI Corp Bhd have the best crude palm oil (CPO) yield for 2013, according to Maybank Kim Eng Research.

IOI Corp also remained one of the most profitable plantation groups on the research house’s list, although the group dropped to third spot, while TSH made it to the list of top-five most profitable planters.

Maybank KE said 2013 was a tree stress year for some plantation groups, as fresh fruit bunch (FFB) yield fell for First Resources Ltd, IJM Plantations Bhd, Golden Agri Resources Ltd, Ta Ann Holdings Bhd and PT Astra Agro Lestari Tbk (AALI).

“In terms of the best yield achieved by the groups on our list, TSH posted the best CPO yield for 2013 at 5.3 tonnes per ha, boosted by its high FFB yield of 25.3 tonnes a ha and oil extraction rate of 21%.

“This was followed by IOI Corp (5.1 tonnes per ha) and Kuala Lumpur Kepong Bhd (KLK) (4.8 tonnes per ha). The bottom-three spots were occupied by Kencana Agri at 3.3 tonnes per ha, Sarawak Oil Palms Bhd (3.4 tonnes per ha) and Boustead Plantations Bhd (3.6 tonnes per ha),” the research house said.

In terms of profitability, Singapore’s First Resources retained its top spot on Maybank KE’s list as the most profitable upstream plantation group in 2013, with an earnings before interest and tax of about RM9,620 per ha, partly supported by its locked-in sales at high prices.

Singapore-listed Bumitama Agri Ltd (BAL) moved up one spot from 2012 at the expense of IOI Corp, which dropped to third spot. TSH’s improved FFB yield have propelled the group to the top-five position.

By inference, Maybank KE said “the more profitable groups have the lower cost structure per tonne of CPO and could weather the current low CPO price” better than their peers.

Nevertheless, Maybank KE said the top-five listed oil palm planters in the world in 2013 remained unchanged from 2012, with Sime Darby Bhd (525,000ha) taking the top position, followed by Golden Agri (371,000ha), Felda Global Ventures Holdings Bhd (FGV) (335,000ha), Wilmar International Ltd (241,000ha) and Indofood Agri (239,000ha).

“Overall, the top-10 planters account for slightly under 20% of the total oil palm planted area globally,” the research house said.

Maybank KE noted that integrated players with downstream operations, diversified players and relatively low-cost producers, including IOI Corp, Sime Darby, First Resources, KLK and BAL, were least sensitive to CPO price changes.

“Those that have purer upstream exposure and relatively high all-in cost of production (per tonne) are the most leveraged due to either their relatively lower oil yield or higher cost base. They include TH Plantations Bhd, FGV, Boustead Plantations, AALI and Ta Ann, whereby for every RM100 per tonne change in the CPO average selling price (on a full-year basis), their earnings, we estimate, would change by 10%-13%,” Maybank KE said.

Bernama