The palm oil player’s results for the financial year ended June 30, 2023 (FY2023) saw a 35% fall in net profit to RM1.14 billion from RM1.73 billion in FY2022, and a 25.64% revenue decline to RM11.58 billion from RM15.58 billion.

Its Q4 FY2023 net profit plunged 93.13% to RM37.2 million from RM541.8 million a year earlier, mainly due to lower contribution from both its plantation as well as resource-based manufacturing segments.

Nevertheless, the research houses said the decline was within expectations and predicted the group’s upstream earnings will improve in FY2024, on the back of lower costs, while downstream earnings could be dragged slightly by lower refining margins.

The group expects refinery margins to remain soft due to stiff competition from Indonesia.

IOI Corp expects moderate fresh fruit bunch (FFB) growth in FY2024, recording FFB growth of 9.3% year-on-year (y-o-y) in Q1 FY2024.

RHB Research foresees growth to decrease given IOI Corp’s aggressive replanting schedule for 10,000 hectares of land in FY2024. It forecasts FFB growth to be 2.4% for FY2024.

It sees crude palm oil (CPO) prices hitting RM3,900/tonne in FY2024, it said in a research note today.

RHB Research said IOI Corp achieved a CPO price of RM3,906/tonne (-26% y-o-y) in Q4 FY2023, bringing the FY2023 average price to RM4,118/tonne (-12% y-o-y).

The research house claims IOI Corp generally sells forward about 20% to 50% of its output three to four months ahead.

It set a lower target price (TP) of RM4.55 for IOI Corp and trimmed its earnings forecasts by 1% for FY2024 and 8% for FY2025.

Meanwhile, HLIB Research raised its core net profit forecasts for IOI Corp by 10.4% for FY2024 and 6.2% for FY2025, mainly to account for higher contribution assumptions for the group’s specialty fats associate.

IOI Corp said it expects a better performance for its specialty fats sub-segment through associate company Bunge Loders Croklaan, which is driven by the newly acquired refinery facility in North America and the introduction of innovative product applications.

HLIB Research has put a higher TP of RM4.66 on IOI Corp, from RM4.30 previously, based on 22 times revised core earnings per share of 21.2 sen forecast for 2024.

As at 3.16pm, IOI Corp’s share price was down nine sen or 2.2% at RM3.96, giving it a market capitalisation of RM24.9 billion.