PETALING JAYA: The 5% sales and service tax (SST) on palm kernel oil is likely to impact IOI Corp Bhd
’s margins, says AmInvestment Research.
The research house said it would be tough to pass on the SST costs to customers when Indonesian producers are selling their products at lower prices.
It added that the integrated plantation company’s oleochemical earnings before interest and taxes (Ebit) was RM14.6mil in the third quarter of its financial year 2025 (3Q25). The group has an annual oleochemical production capacity of 890,000 tonnes, which is mainly in Malaysia.
AmInvestment Research also expects IOI Corp’s Ebit for its manufacturing segment to fall by 6% in financial year 2026 as global economic uncertainty affects demand.
However, the research house also said it expects IOI Corp’s production of fresh fruit bunches to increase by more than 30% quarter-on-quarter for 4Q25.
“This is anticipated to offset a 14.3% decline in average crude palm oil (CPO) prices. We estimate IOI Corp’s average CPO price realised at RM4,000 per tonne in 4Q25 versus. RM4,667 per tonne in 3Q25,” the research house said.
The research house said it was maintaining a “hold” call on IOI Corp with a target price of RM4.05 based on a calendar year 2026 price-to-earnings multiple of 18 times.
