IOI Corporation Bhd’s outlook is expected to remain encouraging on the back of better crude palm oil prices, which averaged RM2,526 in the beginning of 2010, said Kenanga Research.
It said it expected a slight drop of 0.9 per cent in revenue and a drop of 0.5 per cent in net profit for the company in the current financial year.
In a research note released Thursday, Kenanga Research also forecast a trimming of 2.1 per cent in revenue for the 2011 financial year and a decline of 3.5 per cent in net profit as a result of coverage changes.
IOI Corp’s pre-tax profit for the second quarter ended Dec 31, 2009 rose to RM598.241 million from RM333.495 million in the same quarter of 2008.
IOI in an announcement to Bursa Malaysia had said the increase was due to higher profit contribution from the property and manufacturing segments and unrealised translation gain on US dollar-denominated borrowings.
Its revenue, however, declined to RM3.06 billion from RM3.727 billion previously.
Meanwhile, MIDF Equity Beat said CPO prices will remain firm this year and next year, with average prices to be at RM2,450 per metric tonne and RM2,650 per metric tonne respectively.
“We expect CPO prices to remain firm in the first quarter of 2010 but may be coming under pressure as the South American soybean harvest begin in the second quarter,” it added.
Meanwhile, ECM Libra Investment Research said it expected softer yields and hence profits in the third quarter of this year due to the seasonal production down cycle.
It said this will be despite the stronger CPO prices so far.
“Malaysian Palm Oil Board statistics just for January have indicated that production declined some 11 per cent and this should be reflected in the group’s (IOI) numbers,” it said.
“We will continue to see stagnant growth into 2010 as the group has minimal major maturities coming on-stream,” it said.
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