KUALA LUMPUR: Kenanga Research has raised its target price on Hap Seng Plantations Bhd on expectation of strong cashflows on top of a sizeable cash surplus as well as a generous dividend outlook.

       “Like many of its peers, robust cashflow can be expected from Hap Seng Plantations over financial year 2021 to 2023 (FY’21-FY’23) but not many of its peers has a balance sheet as “liquid” as the planter,” said the research firm.

       It added that the group ended the third quarter of FY’21 with RM346mil in net cash while the fourth quarter operating cashflow is set to stay strong.

       Kenanga Research expects Hap Seng Plantations to see a surge in FY’21 core net profit from RM69.3mil in FY’20 to RM190mil due to all-time-high crude palm oil prices.

       In addition, Hap Seng Plantations announced on Monday the completion of its divestment of Mull Hill Estate, which comprises seven parcels of agriculture land in Tawau, Sabah, to its parent company Hang Seng Consolidated Bhd.

       According to Kenanga Research, the impact of the divestment on FY’22 core earnings per share will be marginal but there will be a one-off disposal gain of RM23.4mil.

       “We are expecting FY’21 full-year net dividend to double from seven sen in FY’20 to 14 sen.

       “As an interim 1.5 sen dividend was paid in September, an estimated final dividend of circa 12.5 sen is estimated for FY’21,” it said.

       Kenanga Research expects dividends in FY’22-FY’23 to be 10 sen to 11 sen.

       The research firm maintained its “outperform” recommendation on Hap Seng Plantations and raised its target price to RM2.65.