PETALING JAYA: Analysts have raised United Malacca Bhd’s (UMB) earnings projections for the financial year (FY) 2022 to FY24 following the planter’s recent above expectation third quarter of FY22 results and higher crude palm oil (CPO) price forecasts.

       Kenanga Research in its latest report has upgraded the target price (TP) for UMB to RM5.90 from RM5.40 previously, while retaining a “market perform” rating on the stock.

       Compared with similar sized plantation companies with market capitalisation of RM1bil to RM3bil, the research house said “UMB is already trading at comparable valuations with slightly lower prospective FY22 price earnings ratio and price per net tangible asset but also lower dividend yields.”

       Furthermore, larger integrated plantation players were ahead in terms of environmental, social and governance disclosures as well as certifications, according to Kenanga Research. It pegged the CPO price to average of RM4,500 per tonne in FY22 from RM4,000 previously.

       For FY23, it has raised the CPO price estimate to RM4,000 per tonne from RM3,200 per tonne earlier to reflect a firmer price outlook stretching beyond calendar year (CY) 2022.Hence, the research house has upgraded UMB’s core earnings per share estimate to 53.8 sen for FY22 and 51.2 sen for FY23 respectively.

       The risks to Kenanga Research’s call include adverse weather and softer CPO prices.

       Meanwhile, TA Research has revised upward UMB’s FY22 and FY23 earnings projections by 38.4% and 60.8% respectively.

       This is after factoring in the better-than-expected Q3FY22 results and higher CPO price assumptions of RM4,500 per tonne for FY22 and RM4,000 per tonne for FY23 respectively.TA Research, which has a “buy” call on UMB, has adjusted the stock’s TP higher to RM6.83 from RM6.38 previously after rolling forward its valuation base year and pegging a price-earnings multiple of 20 times on revised CY23 earnings.

       CGS-CIMB Research, meanwhile, has raised UMB’s FY22-FY24 core net profit forecasts by 7%-42% to reflect its higher CPO price forecasts. “However, we maintain a ‘hold’ as we believe UMB is already fairly valued at current levels,” the research house said.