KLK's earnings set to improve as derivatives losses recede, says CIMB Securities
By Azanis Shahila Aman
KUALA LUMPUR: Kuala Lumpur Kepong Bhd (KLK) is expected to register a higher second half of (2H) financial year 2025 (FY25) net profit in absence of derivatives losses, said CIMB Securities Research.
The research house said KLK lowered its FY25 fresh fruit bunch (FFB) output guidance to mid-single-digit growth but remains positive about 2H prospects, supported by improved production.
"This suggests that 2HFY9/25 production could account for about 52 per cent of full-year output, supporting earnings momentum, although this will be partly offset by lower current crude palm oil (CPO) prices," it said.
Meanwhile, CIMB Securities said KLK recorded a 2.5 per cent year on year (yoy) decline in ex-mill CPO production costs to RM2,100/tonne in 1HFY25, driven by lower fertiliser prices.
However, the firm said refining margins are expected to remain weak, the glove division is still loss-making, and gas supply disruptions have affected oleochemical plant efficiency in third quarter (Q3) FY25.
"KLK shared that the RM252 million in derivatives losses in 1HFY25 was mainly related to unrealised US dollar hedges of RM143 million.
"We maintain our Hold call with an unchanged target price of RM21.50," it added.
Source : klks-earnings-set-improve-derivatives-losses-recede-says-cimb
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