(KLK) in FY21 as fresh fruit bunch (FFB) growth is expected to rise on an industry-wide production recovery after a low season.According to Kenanga Investment Bank Research, KLK is targeting FY21 FFB growth of 10%, excluding contributions from the acquisition of PWS and TSH's FB & TSS Estates, which are both in Indonesia and yet to be completed.
Factoring in contributions from PWS, FB & TSS, FY21 FFB growth could potentially hit 15%, it said.
PWS' acquisition has been pushed back to the first half of FY21 while the purchase of FB & TSS estates is on track to be completed by 2QFY21.
Upon completion of both acquisitions, KLK’s total planted area would increase about 8% to about 236,000ha, while its geographical mix of estates in Indonesia would increase to about 58% (versus about 55% previously).
Kenanaga raised its FY21 core net profit estimate by 4% on higher FY21 FFB growth of 12% versus 6% previously.
It reiterated its "outperform" recommendation with a higher target price of RM26 from RM25.