SPB’s crude palm oil production recovery on track

PETALING JAYA: The recovery of Sarawak Plantation Bhd’s (SPB) crude palm oil (CPO) production is on track, backed by expected fresh fruit bunch (FFB) yield improvement, growing matured area and higher replanting activities for financial year 2024 (FY24), says Apex Securities Bhd.

According to the research house, SPB is said to have an optimistic FFB yield target of 18 tonnes per ha for FY24, slightly higher than last year’s yield of 16.85 tonnes per ha, owing to improved oil palm tree age.

A further boost in FFB production to 20 tonnes per ha is also anticipated by SPB in FY25 as a result of the lower age profile of oil palm trees.

That being said, Apex Securities opined that FFB production yield will continue to remain robust as more planted areas reach maturity in the coming year.

Meanwhile, SPB is looking to replant 4,000 ha for FY24, in which Apex Securities noted will be significantly higher as compared to 1,100 ha recorded in the previous year.

SPB said this decision to increase replanting activities was made due to the availability of its own seedlings, following the establishment of two more nursery seedling plants in late-FY22.

“While this initiative might appear to impact production, we anticipate a minimal effect as the move primarily involves replacing older matured areas that are reaching the end of their economic life span,” Apex Securities said.

Additionally, with the group’s harvestable area targeted to hit the 21,000 ha mark in FY24, SPB anticipates that 240 ha of planted area will reach maturity in FY24 and 600 ha in FY25.

The 21,000 ha of harvestable area is inclusive of replanting activities and additional land area from the recovered encumbered land.

To date, SPB has planted 1,700 ha out of the 4,200 ha recovered encumbered land.

“While SPB anticipates the average CPO price for FY24 of RM4,200 per tonne, we maintain a slightly bearish outlook at RM4,000 per tonne, amid pessimistic views over the global demand situation,” Apex Securities added.