KUALA LUMPUR – MIDF Research sees Sime Darby Plantation Bhd’s (SDP) fresh fruit bunch production improving in the near term on the expected arrival of migrant workers in the plantation sector latest by the first quarter of 2022.
“Moving forward, we expect the group’s earnings to continue to be supported by favourable crude palm oil (CPO) prices, in line with its record high in recent weeks,” it said in a note today.
As for the downstream segment, the research house expects it to continue performing well on the back of better performance of the bulk business.
“With regard to the latest development of the withhold release order (WRO), we believe the appointment of the independent ethical trade consultancy will help to accelerate the auditing process and eventually have the United States Customs and Border Protection (CBP) order revoked,” the research house said.
SDP said last week that the company has continued to engage with the US CBP and expects to submit a report by Impactt Ltd in the first quarter this year.
The planter appointed Impactt Ltd last March as a third-party assessor to its newly established Expert Stakeholder Human Rights Assessment Commission.
“We observed that SDP has shown its commitment to address the WRO and Notice of Findings issued by the US CBP and is on the right track given that the group has decided to reimburse the aggregate amount of RM38.55 million to 15,078 current workers on February 17, 2022 for potentially incurred recruitment fees,” it noted.
MIDF Research has maintained a “buy” recommendation on the company, with a revised target price of RM5.50.
The plantation company’s results for the financial year ended December 31, 2021 saw its net profit jumping 90% to RM2.26 billion from a year ago on higher CPO and palm kernel prices.
At noon, SDP was traded 3.3 sen lower at RM4.57 sen, with 4.76 million shares changing hands. – Bernama, February 21, 2022
