Negri Sembilan Oil Palms Berhad: A Stellar First Quarter Amidst Market Volatility
The Malaysian palm oil sector continues to be a fascinating space for investors, characterized by its inherent volatility and strategic importance. Today, we delve into the latest financial performance of Negri Sembilan Oil Palms Berhad (NSOP), a prominent player in the cultivation of oil palms and the production of crude palm oil (CPO) and palm kernel (PK) in Peninsular Malaysia.
NSOP’s first financial quarter ended 31 March 2025 (1QFY2025) report reveals a robust financial rebound, showcasing impressive growth in both revenue and profitability. With profit net of tax more than doubling and a notable dividend declaration, NSOP’s latest results certainly warrant a closer look. Let’s unpack the numbers and understand the driving forces behind this performance, as well as the path ahead for the company.
1. Financial Performance: A Quarter of Significant Growth
NSOP has delivered a remarkable performance in 1QFY2025, demonstrating strong operational execution and benefiting from favorable market conditions compared to the same period last year. Here’s a snapshot of the key financial highlights:
1QFY2025
Revenue: RM30,254,000
Profit Before Tax: RM15,617,000
Profit Net of Tax: RM12,395,000
Basic Earnings Per Stock Unit: 15.95 sen
Net Cash from Operations: RM12,783,000
1QFY2024
Revenue: RM19,812,000
Profit Before Tax: RM7,524,000
Profit Net of Tax: RM5,828,000
Basic Earnings Per Stock Unit: 7.41 sen
Net Cash from Operations: RM435,000
Revenue Soars by Over 50%
Revenue for 1QFY2025 surged by an impressive 52.71% to RM30.25 million, up from RM19.81 million in the corresponding quarter of 2024. This significant increase was primarily driven by a combination of higher sales volumes and improved selling prices across its key products:
- Fresh Fruit Bunches (FFB): Sales volume increased by 8.97%, coupled with a 25.73% rise in average selling prices.
- Crude Palm Oil (CPO): Saw a substantial 53.18% increase in sales volume and a 24.52% improvement in average selling prices.
- Palm Kernel (PK): Experienced a 17.94% growth in sales volume and a remarkable 70.54% jump in average selling prices.
While revenue dipped slightly by 3.61% compared to the immediate preceding quarter (4QFY2024), the year-on-year growth clearly highlights the strength of the current quarter’s performance.
Profitability Doubles
The stellar revenue growth translated directly into a significant boost in profitability. Profit before tax more than doubled, increasing by 107.56% to RM15.62 million from RM7.52 million in the prior year’s corresponding quarter. Consequently, profit net of tax saw an even more dramatic increase of 112.68%, reaching RM12.40 million compared to RM5.83 million in 1QFY2024.
This surge in profit was further supported by a substantially higher dividend income and an increase in other income, mainly due to fair value gains on consumable biological assets. However, it’s worth noting that the cost of sales also increased, primarily due to higher purchases of FFB.
Earnings Per Share Jumps
Reflecting the strong bottom-line performance, basic earnings per stock unit (EPS) for NSOP soared by 115.25%, from 7.41 sen in 1QFY2024 to 15.95 sen in 1QFY2025. This indicates a much healthier return for shareholders on a per-share basis.
Solid Financial Health and Cash Flow
Beyond the income statement, NSOP’s balance sheet remains robust. Total assets increased to RM881.42 million as at 31 March 2025 from RM860.45 million at the end of December 2024. This was mirrored by an improvement in net assets per stock unit, rising to RM9.40 from RM9.17 over the same period.
Crucially, the company’s cash flow from operations saw an extraordinary increase of over 2,800%, generating RM12.78 million in net cash from operating activities compared to just RM0.44 million in 1QFY2024. This strong operating cash flow is a testament to the company’s efficient management and liquidity, especially considering NSOP reports no borrowings or debt securities, indicating a debt-free balance sheet.
2. Navigating the Future: Prospects and Challenges
While NSOP’s 1QFY2025 performance is undoubtedly strong, the company operates in an industry susceptible to various external factors. Understanding the prospects and potential risks is crucial for any investor.
Prospects: Satisfactory Outlook with Stable CPO Prices
Looking ahead, NSOP anticipates satisfactory plantation results for the financial year ending 31 December 2025. This optimism is based on the expectation that the current trend in average selling prices of CPO will remain
