HLIB Research anticipates another decent set of 3Q25 results for planters, particularly from upstream earnings contributions.
PETALING JAYA: Analysts are expecting higher crude palm oil (CPO) prices to support the financial performances of plantation companies for the third quarter of this year (3Q25).
The financial results for 3Q25, which are scheduled to be released this month, are also expected to be lifted by higher fresh fruit bunch (FFB) output and palm product prices, said Hong Leong Investment Bank Research (HLIB Research).
The research house anticipates another decent set of 3Q25 results for planters, particularly from upstream earnings contributions.
“We are maintaining our CPO price assumptions for this year and next year at RM4,300 per tonne and RM4,200 per tonne, respectively,” it said, adding that planters would likely post better upstream performances on a quarter-on-quarter basis.
Key re-rating catalysts for CPO include worse-than-expected La Nina conditions, which could in turn weigh on production of palm and soybean, particularly in South America, and the smooth implementation of a biodiesel mandate in Indonesia. Year-to-date, CPO has averaged at RM4,351 per tonne.
The research house has maintained an “overweight” call on plantation stocks supported by a positive outlook for CPO prices over the near to medium term.
“We prefer planters with greater exposure to Malaysian upstream operations, given firmer CPO prices,” it added.
It favours SD Guthrie Bhd
as a top pick with a “buy” call and target price of RM5.76.
“We favour SD Guthrie for its ongoing efforts to diversify earnings drivers, particularly through expansion into renewable energy and industrial property developments by leveraging its land, improving balance sheet, and decent dividend yield of 3% to 4%.
“Another top pick with a ‘buy’ call is Hap Seng Plantations Holdings Bhd, with a target price of RM2.29. We like Hap Seng for its solid balance sheet with net cash and net cash per share of RM653.6mil and 81.7 sen, respectively, as of Jun 30, and its position to benefit from high CPO prices,” the research house added.
CIMB Research, which has an unchanged “overweight” recommendation on plantation stocks, said it believes that policy tailwinds would lift CPO prices.
It said in a report that Glenauk Economics, which co-hosted a recent industry event, highlighted that palm oil fundamentals remain firm despite short-term volatility linked to biodiesel policy changes.
The research house said Glenauk expects palm oil production to strengthen next year, with Indonesia’s output rising by 3% year-on-year and Malaysia’s by 1% to between 19.6 million tonnes and 19.8 million tonnes.
