HLIB Research said it has nudged the group’s FY25-FY26 core net profit forecasts by 0.5% and minus 0.8%.
PETALING JAYA: Analysts expect Johor Plantations Group Bhd
’s earnings in the upcoming quarters to normalise in anticipation of the lower crude palm oil (CPO) prices ahead.
The planter posted a core net profit of RM70.5mil for the first quarter of financial year 2025 (1Q25), down 24% quarter-on-quarter (q-o-q), but up 53% year-on-year (y-o-y).
According to RHB Research, Johor Plantations’ 1Q25 earnings were in line with both its and the street estimates.
“We expect earnings to slightly weaken q-o-q looking ahead, due to moderating average selling prices (ASPs).
“However, this may be offset by improving productivity,” the research house said in a report yesterday.
On the group’s fresh fruit bunches (FFB), RHB Research said 1Q25 FFB output plunged by 25% q-o-q and down 10% y-o-y mainly due to heavy rainfall in Johor affecting 2,798ha or 5% of planted area.
“In the four months of 2025, the situation marginally improved, with FFB output growth improving to minus 8% y-o-y below our and management’s guidance of a 5% rise for financial year 2025 (FY25),” it added.
Despite this, Johor Plantations is keeping its target for FY25, as it anticipates a larger pick-up from May, with peak output in 3Q25.
“We remain conservative and trim FFB growth to 3% from 5% for FY25, and adjust our growth estimate to 4% to 5% for FY26-FY27 from 5% to 6%,” RHB Research noted.
The research house also said the group’s CPO ASP was RM4,969 per tonne in 1Q25, which is a 5% premium over the Malaysian Palm Oil Board (MPOB) price, while its palm kernel ASP climbed by 65% y-o-y to RM3,989 per tonne.
As usual, Johor Plantations has not sold forward its output, but secured a premium over the MPOB price for 70% of output in 2025, ie, RM130 to RM200 per tonne.
RHB Research has kept its CPO ASP premium forecast of 3% for FY25 to FY27 for now.
“Overall, we trim the forecast FY25-FY27 earnings by 5% each after adjusting for slightly lower FFB growth assumptions and higher unit costs,” it added.
The research house has maintained a “buy” call on the stock with a lower target price of RM1.55.
The key risks to its call include CPO price volatility and adverse weather conditions.
Meanwhile, Hong Leong Investment Bank (HLIB) Research in a note to clients said Johor Plantations’ 1Q25 results were within expectations.
The brokerage firm said it had nudged the group’s FY25-FY26 core net profit forecasts by 0.5% and minus 0.8%.
This is mainly to reflect the recalibration of HLIB Research’s earnings model following the release of its FY24 annual report and a slight tweak in its FY25-FY26 FFB output assumptions.
Johor Plantations’ management also remains confident of achieving single-digit FFB output growth in FY25, as it expects production to pick up from May 2025 onwards.
This in turn will result in CPO production cost declining to RM2,050-RM2,100 per tonne for FY25 from the RM2,228 per tonne recorded in 1Q25, HLIB Research noted.
Post-earnings revision, the brokerage firm has maintained a “buy” rating on Johor Plantations with an unchanged target price at RM1.35 per share.
