Sarawak Oil Palm Bhd's (Sarawak Oil Palm) headline profit after tax and minority interest (PATMI) in the third quarter of 2023 (3Q23) of RM95 million was in part lifted by reversal of impairment loss on investments in a joint venture of RM3.5 million, fair value gain on biological assets of RM3.4 million and fair value gain on derivatives at RM2.7 million.

Adjusted, 3Q23 core PATMI of RM89 million brings core PATMI for its first nine months (9M23) to RM181 million which met 80 and 77 per cent of Maybank Investment Bank Bhd (Maybank Research) and street full-year estimates.

“The higher year on year (y-o-y) earnings before interest and tax (EBIT) 3Q of RM126 million was mainly boosted by higher fresh fruit bunch output and low unit cost output which mitigated lower palm oil products' average selling price (ASP).

“As for downstream, we understand it was barely breaking even in 3Q23.”

Core PATMI in 9M23 was above Maybank Research's but met street estimates.

It expect 4Q23 earnings to be lower quarter on quarter (q-o-q) as output has peaked seasonally in 3Q.

The research firm said Sarawak Oil Palm's high net cash of RM640 million – or 28 per cent of market capitalisation – and low price earnings ratio valuation are key attractions.

“9M23 FFB output of 877,338 tonnes met 72 per cent of our full-year forecast); in-line with our two per cent FFB growth assumption for FY23.

“We estimate its 9M23 all-in operating cost to customer at RM2,539 per tonne,” it said.

“FY23's cost will broadly be similar to 9M23 as 4Q weather has remained relatively conducive for completion of its manuring plan.”