Phillip Capital Research maintains its projection of CPO growth to be at 15% y-o-y to 122,000 tonnes in 2025.
PETALING JAYA: Phillip Capital Research is positive on Sarawak Plantation Bhd
’s medium-to-long-term prospects, underpinned by improving yields, disciplined cost control and sustained replanting efforts that are beginning to bear fruit.
“We project the company’s fresh fruit bunch (FFB) production to rise to 378,000 tonnes in 2025, an increase of 12% year-on-year (y-o-y), supported by improving yields as more palms enter their prime age and about 1,100 ha of newly matured areas come into production.
“Management remains confident in its growth outlook, targeting more than 420,000 tonnes by 2026 and more than 550,000 tonnes by 2029, underpinned by a more favourable age profile, better field practices and continued mechanisation gains,” the research house said.
Replanting efforts over recent years are also starting to bear fruit through improved productivity.
While the group has revised its 2025 FFB guidance to 380,000 tonnes (from 400,000 tonnes) due to wetter-than-expected conditions in the first quarter of financial year 2025 (1Q25), crude palm oil (CPO) output is expected to remain flat y-o-y, supported by steady external FFB volumes.
“We expect a sequential recovery in 2Q25, in line with seasonal trends (year-to-date May FFB stood at 131,000 tonnes, a 7.9% rise y-o-y).
“We maintain our projection of CPO growth to be at 15% y-o-y to 122,000 tonnes in 2025.“
Overall, the CPO unit cost of own crops is expected to fall to RM2,400 to RM2,500 per tonne in 2025, from RM2,800 per tonne in 2024 and RM2,300 per tonne in 2026, supported by volume recovery and a higher internal FFB share.
“While the February 2025 minimum wage hike is expected to raise labour costs by 3% to 4%, field efficiencies and disciplined cost control are expected to preserve margins.
Fertiliser cost pressure remains manageable, with mixed price trends across key input types,” the research house noted.
Phillip Capital is maintaining its “buy” rating with an unchanged target price of RM2.88, based on nine times 2026 earnings per share, in line with small-cap upstream peers.
“Key downside risks include lower-than-expected production and palm product prices, cost inflation and regulatory headwinds,” the research house added.
