PETALING JAYA: TH Plantations Bhd’s (THP) earnings shortfall for the financial year 2024 (FY24) was dragged by lower-than-expected crude palm oil (CPO) average selling prices (ASP) achieved and slowing of fresh fruit bunch (FFB) output.
Maybank Investment Bank (Maybank IB) Research, in a report, has cut the planter’s FY25 and FY26 core profit after tax and minority interest (Patmi) forecasts by 14% and 20%, respectively, on slightly lower CPO ASPs and higher unit cost to account for higher-than-expected minimum wage cost guidance.
“For FY25, we expect a 5% year-on-year (y-o-y) core Patmi growth premised largely on a 5% FFB growth, which offset lower CPO ASP,” the research house noted.
According to Maybank IB Research, THP’s key catalyst remains the speed of its deleveraging exercise to improve its balance sheet position.
In addition, the group continues to earmark RM809mil of its assets for disposal as at end-December 2024.
In terms of FFB, the research house said the first 12 months of FY24, FFB output was 98% of its full-year FFB forecast due to slowing output towards year end.
Heavy rainfall and flash floods affected some of THP’s estates operations in early 2025, explained Maybank IB Research.
In January 2025, THP reported a 16% y-o-y decline in FFB output.
“Although THP targets a 15% y-o-y FFB growth for FY25, we have only imputed a 5% y-o-y growth for FY25,” said the research house.
Following its earnings per share downgrade on THP, Maybank IB Research said “we cut our target price to 58 sen from 68 sen while maintaining a hold call”.
It noted key risks to the palm oil sector and THP are weather anomalies resulting in poorer-than-expected output growth and lower-than-expected CPO price achieved.
Other risks include negative policies imposed by import countries and unfriendly policies imposed by the Malaysian and Indonesian government on upstream or downstream segments, sharply lower crude oil prices which makes palm biodiesel demand not viable as well as weaker competing soybean and rapeseed oil prices.
THP shares closed 1.71% up to 59.5 sen yesterday
