MIDF Amanah Investment Bank Bhd (MIDF Research) and Maybank Investment Bank Bhd (Maybank IB) have both maintained positive views on Genting Plantations Bhd, with MIDF Research maintaining a BUY call and a target price of RM6.10. At the same time, Maybank IB upgraded its target price to RM6.96. Both analysts highlighted that the company's performance in 3QFY24 was driven by higher crude palm oil (CPO) selling prices, despite some challenges in production.

MIDF Research's report revealed a 3.1% year-on-year increase in profit after tax and minority interest (PATAMI) to RM83.1 million, bringing the 9MFY24 total to RM211.0 million, a 10.9% rise. This growth was largely due to higher CPO and palm kernel (PK) selling prices, although the company's fresh fruit bunch (FFB) production was slower due to low cropping trends. Profit from upstream operations remained stable at RM116.1 million, while the downstream sector showed a positive turnaround, recording a profit of RM0.5 million. MIDF Research analysts noted that Genting Plantations' performance was in line with expectations, making up 75% and 77% of full-year estimates for MIDF and consensus respectively.

Maybank IB, on the other hand, noted that while 3Q24 core PATMI fell by 23% year-on-year to RM66 million, Genting Plantations is expected to deliver its strongest quarterly earnings in 4Q24. This is due to a recovery in crop production in Indonesia, which had been delayed, and the ongoing high CPO average selling price (ASP). Maybank IB's revised target price reflects a 31% upside potential from the current price of RM5.50, maintaining its BUY rating. The analysts also adjusted their earnings forecasts upwards by 3%-5% for FY24-26E, based on the expected improvements in both CPO prices and crop recovery in the fourth quarter.

Despite the challenges, including lower FFB output and the impact of biological tree rest, Genting Plantations' overall outlook remains positive, according to both analysts. The company's downstream operations, particularly the biodiesel and refinery plants, showed strong performance, while the property segment has seen a significant pick-up in sales.

The company expects its FFB output to peak in Q4, with Indonesia's crops recovering. The replanting activities in Malaysia, although impacting short-term production, are expected to contribute to future growth. However, the company's downstream segment faces competition from Indonesian producers, and market conditions remain tough due to overcapacity in Indonesian refineries.

Both analysts see Genting Plantations as well-positioned to weather short-term production challenges, with MIDF Research maintaining a target price of RM6.10 and Maybank IB setting a new target of RM6.96, supporting their BUY ratings for the stock.