KUALA LUMPUR: Kenanga IB Research has kept its “market perform” call on United Malacca Bhd at RM6.32.
However, the firm is reviewing the plantation company’s target price, pending its new calendar year 2015 crude palm oil (CPO) price estimate.
This was due to United Malacca’s downside bias to potential earnings in financial year 2016, Kenanga IB said.
The firm said United Malacca’s core net profit for the first half ended FY2015 came in below expectations, largely due to lower-than-expected CPO prices.
“The key variance is the lower-than-expected CPO prices in the second quarter of FY2015 at only RM2,140 a tonne against our estimate of RM2,500 a tonne,” it said.
Kenanga IB said United Malacca’s outlook in FY2015 is “neutral”.
“On a positive side, the management expects additional 852ha to reach maturity this year,” it said.