PETALING JAYA: Analysts are positive on TH Plantations Bhd’s prospects following the planter’s latest third-quarter financial year 2025 (3Q25) earnings, which improved on higher crude palm oil (CPO) average selling prices (ASPs).
Maybank Investment Bank Research (Maybank IB) in a note to clients said TH Plantations’ earnings are highly sensitive to CPO price movements.
“This is given its relatively high all-in operating cost-to-customer estimated at RM2,800 per tonne of CPO for the financial year 2025 (FY25) and financing expenses at around RM420 per tonne.
“This is given its high net gearing of 103% as at end-2024, if its perpetual sukuk of RM300mil is reclassified as debt instead of equity,” it noted.
Combined, this brings TH Plantations’ total unit cost to an estimated RM3,220 per tonne for FY25.
Maybank IB said: “For every RM100 per tonne increase in our CPO price assumption, it raises the plantation group’s profit after tax and minority interest by about RM8mil.”
Following its earnings upgrades mainly on higher ASPs, the brokerage firm raised the stock to a “buy” call with a new target price of 64 sen from 54 sen previously.
The “buy” call is for TH Plantations’ decent valuations at less than 10 times the forward price-to-earnings ratio and a net dividend yield of 5.5%.
Following the brokerage’s industry-wide CPO ASP revisions to RM4,330 per tonne from RM4,000 per tonne for 2025, and RM4,100 per tonne for 2026, it said: “Our FY25, FY26 and FY27 core earnings per share forecasts are raised by 52%, 11% and 1%, respectively.”
BIMB Research in a report said it had raised its FY25 to FY26 earnings forecasts by 6% after adjusting for lower effective tax rate assumptions.
The research house also remained cautiously optimistic on TH Plantations’ near-term prospects, supported by a recovery in production, expectations of CPO prices holding above RM4,000 per tonne and continued operational efficiency efforts.
However, demand remains competitive and geopolitical risks persist, the research house added.
Meanwhile, TH Plantations has appointed Datuk Borhan Bachi as its new chief executive officer effective Nov 17.
He had more than 35 years of experience in the palm oil sector, including extensive exposure to mill operations, logistics, research and development and renewable energy during his tenure at FGV Holdings Bhd
.
BIMB Research, which has not rated TH Plantations, said the stock is currently trading at a price-to-book value of 0.6 times, which is close to its five-year average.
The research house noted that limited earnings visibility and structural constraints, including higher gearing and asset-disposal uncertainties, are likely to cap its re-rating potential.
