马来西亚种植园：期待一个更光明的2020.docx

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1、28 October 2019MalaysiaEQUITIESQuick SummaryBBG tickerUnitSDPLMKKLKMKMarket capUSDmil7,8925,535Current PriceRM4.7221.60Target PriceRM5.3023.00Upside%12.36.5TSR%13.68.630-day ADTVUSDmil2.05.6FY20E EV/haUSD16,34427,710FY20E PERX43.424.7FY20E PBvX2.11.9FY20E ROE%4.77.9Source: Bloomberg, Macquarie Resea

2、rch, October 2019MQ CPO price forecast vs. ConsensusMalaysia PlantationsLooking forward to a brighter 2020Key pointsWe expect the CPO price to recover from the current levels of RM2,100/mt to RM2,500/mt in CY20 due to tighter S/U ratios.We initiate coverage with an OP rating on Sime Plant and N rati

3、ng on KLK.Sime Plant has plenty of room to improve and is sensitive to the CPO price, bringing an attractive risk-reward in a rising CPO price trajectory.RM/t2,8002,6002,4002,2002,000 -&-=- Ed4CMQug ss二%，oe,dCY21: RM2,734. Throughout CY19E, we saw inventory contracting from 3.0mn mt (Jan) to 2.4mn m

4、t (Sept) and cumulative 9MCY19 exports growing by 15.3% YoY. We think the trajectory will continue well into CY20E, underpinned by the tightening in the veg. oil complex. Despite the upbeat outlook in CY20E, we believe price volatility will continue from now till 2Q20E before seeing a meaningful ral

5、ly. Post first-half harvesting, coupled with the festive season (Ramadhan starting end-April 2020), could yield lower production and thus drive a further drop in inventory, we believe.Initiate on Sime Plant and KLK; we prefer Sime PlantSime Plant (OP; TP RM5.30) - We expect op stats to improve, and

6、this will pare down its costs and improve profitability. We estimate EPS to grow at a 26% CAGR in FY19-22E. Operating at a higher cost of production to peers, Sime Plant has a high sensitivity with a 25% impact to EPS for every RM100 movement in the CPO price - giving it the highest earnings leverag

7、e during a rising CPO price trajectory. KLK (N; TP RM23.00) - We believe KLK remains the safest play for the Malaysia Plantation sector but not so during a rising CPO price trajectory - sensitivity of 10% for every RM100 movement in the CPO price. We factored in a CPO price recovery, better op stats

8、 and earnings growth of a 10% CAGR in FY19-22E; all told, we believe the upside is priced in.Headline risk - India banning Malaysian CPO is our main concernWe believe the main downside risk is that India begins to gradually stop CPO imports from Malaysia due to the current political tensions. India

9、is the biggest importer of Malaysian CPO, with a total share of 28% of YTD Malaysian CPO exports. Losing India as the key customer could severely hurt the CPO price.Please refer to page 40 for important disclosures and analyst certification, or on our website .Fig 27 CPO production per mature ha - S

10、ime Plant to lag behind KLK mainly due to its planted areaFig 28 CPO price recovery coupled with better op stats should help Sime Plant improve its profitabilitySime Plant KLKKLK Sime PlantSource: Company data, Macquarie Research, October 2019Source: Company data, Macquarie Research, October 2019Val

11、uation-wise, Sime Plant looks rich due to its poor earnings delivery in FY19E at 46x of FY20E EPS (vs. KLK at 25x FY20E EPS), but we expect a CPO price recovery coupled with op stats improvement to drive its earnings growth of a 26% CAGR in FY19-22E vs. KLK at a 10% CAGR over the same period. Howeve

12、r, if we compare Sime Plant and KLK based on EV/ha, Sime Plant is at a discount to its peers, while KLK is at a premium.Fig 29 Sime Plant has an EPS CAGR of 26% in FY19-22EFig 30 We estimate KLKs EPS to grow at a 10% CAGR in FY19-22ERM mil 18,000 -16,000 -14,000 -12,000 -10,000 -8,000 -6,000 4,000 -

13、2,000 -0 -% 8% 8a)69。二FY17 FY18370寸8L% eoco20897L89COE8QZ9% 8% 7% 6%- 5% 4% 3% 2% 1% 0%RM mil25,00020,00015,000 10,000 -00oid9%oggcoL6%6%99。FP18* FY19E FY20E FY21E FY22EbLALInLAL9 LAL5%4%4%5%5%5% Revenue Adj. PAT Adj. PAT margin (RHS)FP18 is a 6-month financial period where Sime Plant changed its fi

14、nancial year end to December from June previouslySource: Company data, Macquarie Research, October 2019Revenue06 -CM9及 6L 山 oaL8L9NLL 山6LAL6、o寸OO-L 8 LAL 患 寸。zlal Adj. PAT8UU Lzr-ocm6 CM O10%9%8%7%6%5%4%3%2%1%0% Adj. PAT margins (RHS)Source: Company data, Macquarie Research, October 2019Fig 31 Sime

15、Plants rollingfwd-PE bandsFig 32 KLKs rolling fwd-PE bandsP/E Ave -1 std dev+1 std dev-2 std dev+2 std dev6TAEW 6Tq L 8T0N 8Lo)n4 coTq LL. NLSON ztabz zTq L . 9L30N . 9T6n4 9TAEW 9Tq 之 .gTAON .9Lo)n4 gTABW jTq L 6XSource: Bloomberg, Macquarie Research, October 2019P/E Ave-1 std dev+1 std dev-2 std d

16、ev+2 std devSource: Bloomberg, Macquarie Research, October 2019Fig 33 EV/ha in USD for the top four planters in Malaysia - implied EV/ha averages at US$24,900Fig 34 Plantation land for the top four planters in MalaysiaUSD45,000 -40,000 -35,000 -30,000 -25,000 -20,000 -6C96CO9g6IOL 6M6。OLZleeo.ZL52-E

17、V/ha (current price) aEV/ha (target price implied)Note: EV/ha for Sime Plant and KLK were derived from MQ estimates, while GENP and IOI were derived from consensus estimatesSource: Bloomberg, Company data, Macquarie Research, October 2019Source: Bloomberg, Company data, Macquarie Research, October 2

18、019Source: Bloomberg, Company data, Macquarie Research, October 2019Fig 35 Sime Plants EPS is more reactive to CPO price compared to production growthFig 36 KLK is slightly more sensitive to production vs Sime PlantSime PlantFY20EFY21EFY22EBase case forecasts and assumptionsEPS(sen)10.414.616.0Base

19、CPO production (000 mt)2,3292,3922,400Impact to EPS everv 2% chanqe in CPO productionKLKFY20EFY21EFY22EBase case forecasts and assumptionsEPS (sen)87.494.696.6Base CPO production - ow n (000 mt)906938954Impact to EPS every 2% chanae in CPO production+6%7%7%7%+4%5%5%5%+2%2%3%2%Base0%0%0%-5%-2%-2%-2%-

20、10%-5%-4%-5%-15%-7%-6%-7%Source: Bloomberg, Macquarie Research, October 2019+6%10%11%11%+4%7%7%7%+2%3%4%4%Base0%0%0%-2%-3%-4%-4%-4%-7%-7%-7%-6%-10%-11%-11%Source: Bloomberg, Macquarie Research, October 2019We value the Malaysian plantation stocks using a DCF methodology based on our CPO price decks

21、(CY19E: RM2,070/mt, CY20E: RM2,500/mt, LT: RM2,734/mt), 4% country risk-free rate and market return of 6.5%, We see potential upside of 12% to Sime Plant and 6% to KLK amidst a CPO price recovery. Our TP implies 51x and 26x PE to FY20E EPS for Sime Plant and KLK, respectively.Fig 37 DCF valuation su

22、mmary of Sime Plant and KLKFig 38 Sime Plants valuation sensitivity - CPO price vs. WACCFig 38 Sime Plants valuation sensitivity - CPO price vs. WACCFig 39 KLKs valuation sensitivity - CPO price vs. WACCWACC2,3002,4002,5002,6002,7004.9%10.2110.3010.3810.4610.545.4%7.847.938.018.098.175.9%6.296.376.4

23、56.546.626.4%5.145.225.305.385.466.9%4.384.464.544.624.707.4%3.753.833.913.994.077.9%3.253.333.413.493.57WACC2,3002,4002,5002,6002,7004.9%10.2110.3010.3810.4610.545.4%7.847.938.018.098.175.9%6.296.376.456.546.626.4%5.145.225.305.385.466.9%4.384.464.544.624.707.4%3.753.833.913.994.077.9%3.253.333.413

24、.493.57Long-term CPOprice assumption (RM)Source: Bloomberg, Macquarie Research, October 2019WACC2,3002,4002,5002,6002,7005.2%39.7840.1040.4240.7541.075.7%31.7632.0832.4032.7133.036.2%26.2526.5626.8827.1927.506.7%22.3822.6923.0023.3123.617.2%19.1719.4719.7820.0820.387.7%16.7617.0617.3617.6617.968.2%1

25、4.8215.1115.4115.7016.00Long-term CPO price assumption (RM)Source: Bloomberg, Macquarie Research, October 2019Fig 40 Within the ASEAN Plantations space we prefer First Resources, London Sumatera and Sime Plant (in order of preference)CompanySDPL MKKLKMKShare Price (RM)4.7221.60Target Price (RM)5.302

26、3.00Upside/(Downside)12.3%6.5%TSR13.6%8.6%RecommendationOPN6-year fwd production CAGR2.0%2.6%Beta0.90.9Cost of Equity9.9%9.7%Cost of Debt (post-tax)3.0%3.0%WACC6.4%6.7%Terminal Growth Rate3.0%3.0%Current FY20E PER45.2x24.7xImplied FY20E PER50.7x26.3xCurrent FY20E EV/ha (USD)16,34427,710Implied FY20E

27、 EV/ha (USD)17,91229,328Source: Macquarie Research, October 2019; prices as at 23 October 2019NameBbg CodeRec.Price (Icy)12m tgt (Icy)Upside (%)Mkt cap _ (US$m)19EPER (x) 20E21E19EP/B (x) 20E21EDivide nd yield (%)F OE (%)19E20E21E19E20E21ESinaaporeFirst ResourcesFR SPOP1.561.9022%1,802.413.89.58.91.

28、71.61.42.63.74.513.317.517.0Golden Agri-ResourcesGGRSPN0.210.2624%1,979.027.410.09.40.50.50.52.43.94.21.74.75.0Wilmar InternationalWILSPN3.643.40-7%17,345.213.312.512.21.01.01.03.03.23.37.78.08.1Weighted Average14.712.011.71.01.01.02.93.33.57.68.58.6MalaysiaSime Darby PlantationsSDPLMKOP4.705.3013%7

29、,776.5108.145.532.62.22.12.00.61.41.42.55.26.5Kuala Lumpur KepongKLK MKN21.5423.007%5,503.529.824.822.92.01.91.82.12.12.15.97.17.7IOI CorpIOI MKNR4.28n/an/a6,378.433.530.628.13.02.92.82.12.12.38.58.99.3Genting PlantationsGENP MKNR9.90n/an/a2,121.145.632.126.32.02.01.91.41.71.93.75.46.2Weighted Avera

30、ge60.434.628.22.42.32.21.51.81.95.26.87.6IndonesiaAstra Agro LestariAALI IJN10,700.0010,400.00-3%1,425.782.835.323.31.11.11.02.80.51.41.33.14.5London SumatraLSIP IJOP1,270.001,620.0028%588.045.422.817.91.01.01.01.50.91.82.34.45.5Weighted Average71.931.621.71.11.11.02.40.61.51.63.54.8Weighted average

31、39.423.820.21.71.61.62.22.52.66.27.47.9Source: Bloomberg, Company Data, Macquarie Research, October 2019; prices as at 24 October 2019 closeFinancial summaryFig 41 Sime Darby Plantation (Outperform; TP:RM5.30)RM milFY17FY18FP18FY19EFY20EFY21EFY22EKey DriversFFB production - nucleus (000 mt)9,78410,2

32、335,55610,51210,73310,96811,003FFB production - plasma (000 mt)1,8552,3871,2871,7001,8001,8001,800Total FFB processed (000 mt)11,63912,6206,84312,21212,53312,76812,803CPO production (1000 mt)2,4782,6511,4532,6342,7172,7842,791Realised CPO price (RM)2,8482,7351,9742,0572,4602,6972,730Financials (RM *

33、mil)Upstream3,6403,6911,5603,0113,6284,0324,085Dow nstream11,07910,5604,9539,54410,61011,22711,223Others6011830125130130130Total Revenue14,77914,3696,54212,68014,36815,38815,438Upstream1,9231,7083414871,1041,5471,687Dow nstream247261146191212225224Others2762959616161Total EBIT2,1982,0304967371,3771,

34、8331,972Pre-tax profit4,0312,3774575561,1901,6521,796Tax expense-479-492-145-89-297-463-503Minorities-42-34-6-40-40-40-40Sukuk-3-124-63-124-124-124-124Net Profit3,5071,7272443027281,0251,129Clean net profit1,1671,1851843027281,0251,129Clean EPS (sen)584.525.43.64.410.414.616.0Source: Company data, M

35、acquarie Research, October2019Source: Company data, Macquarie Research, October2019Fig 42 KLK (Neutral; TP: RM23.00)RM vmilFY14FY15FY16FY17FY18FY19EFY20EFY21EFY22EKey DriversFFB production - nucleus (000 mt)3,7343,8063,4963,8743,9293,9894,1174,2454,315FFB production - plasma (000 mt)1,01285165770566

36、1700700700700Total FFB processed (*000 mt)4,7464,6574,1534,5794,5894,6894,8174,9455,015CPO production (1000 mt)1,0441,0409259931,0001,0271,0601,0931,108Realised CPO price (RM)2,3962,1062,2702,7352,3352,0302,4312,6392,639Financials (RM mil)Palm products5,0906,9778,34510,5287,7537,3018,8679,3259,375Rubber14511311513210315010110099Manufacturing5,6346,2417,7399,92410,1309,92710,22510,53210,848Property development117123111142178150130120120Investment holding144199201270240240240240240