Sipef Model update: lower costs will offset softer volumes, increases outlook
Sipef reported a nice 3Q23 update. Although the 4.4% decrease in palm oil production came in slightly below our expectations, the softer volume outlook is expected to be offset by reduced input costs. Because of this, Sipef now banks on a recurring net result (gs) at the “higher end” of the $ 65-$75m range, compared to “between” $60-$70m previously. After increasing our estimates in line with the guidance, we reiterate our Buy & € 66.0 TP.Sipef is a holding company. Through its subsidiaries and associated companies, Co. is primarily engaged in the development and production of sundry commodities, including palm oil, palm kernels, tea, tropical fruits and flowers, bananas, pineapples, ornamental plants, guava, pepper and natural rubber. Palm oil, which is Co.'s most important commodity, is used within the cosmetics industry, in soaps and detergents, as a supplement to cattle and poultry feed, for production of protein, and for several other purposes. In addition, Co. provides management, marketing and consultancy services in the agro-industry.
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