PETALING JAYA: United Malacca Bhd
’s efforts to improve oil palm yields at its Indonesian estates are bearing fruit, as indicated by its strong second-quarter earnings that surpassed expectations.
CIMB Research said United Malacca’s Indonesia segment delivered stronger growth, even though Malaysia remained the key earnings contributor.
In the first half of the financial year 2026 (1H26), United Malacca’s Malaysian plantation operations accounted for 81% of total earnings before interest, tax, depreciation and amortisation (Ebitda).
Ebitda from Malaysian operations surge 40% year-on-year (y-o-y) to RM123mil, driven by higher fresh fruit bunch (FFB) production and stronger palm kernel prices.
The average crude palm oil (CPO) price for Malaysian operations increased 3% y-o-y to RM4,180 per tonne.
“However, United Malacca’s Indonesian plantation operations recorded faster y-o-y Ebitda growth, benefitting from a lower base.
“Ebitda from Indonesia surged 2.49 times y-o-y to RM28.4mil in 1H26, supported by a 26% y-o-y increase in FFB production from prime-age palms and a 37% y-o-y rise in average palm kernel prices in the country to RM3,240 per tonne.
“Higher production volumes also helped reduce unit production costs, further improving profitability at United Malacca’s Indonesian operations,” said CIMB Research.
Meanwhile, Kenanga Research pointed out that the Indonesia operation is still expanding, from 8,000ha out of the 11,000ha available for planting.
“Also, the average age of the 8,000ha planted was just 10 years old, yielding 14 to 15 tonnes of FFB per ha compared to the 18 to 20 tonnes per ha achieved by their older Malaysian estates.
”The average age of the trees in the Malaysia estates is 15 years old,” it said.
The growth in Indonesia is partly a factor behind Kenanga Research’s forecast for a 37% jump in United Malacca’s core net profit in financial year 2026 (FY26).
The earnings will then decline “a little by 7%” in FY27, added the research house.
“Softer CPO prices are likely but still firm over FY26 to FY27, underpinned by rising edible oil supply but just enough to cover rising demand.
“Hence, our CPO price outlook of RM4,200 per tonne for FY26 and RM4,000 in FY27 compared to RM4,241 achieved in FY25.”
As for costs, Kenanga Research said any increases should stay manageable.
Labour and fertiliser costs are expected to increase by about 7% to 8% and 20%, respectively, over FY26 to FY27 but higher fruit output, good palm kernel prices and a firm ringgit should help offset some of the cost inflation.
In 1H26, United Malacca’s earnings nearly doubled on a y-o-y basis.
This was driven by stronger-than-expected production and a lower effective tax rate.
United Malacca’s 1H26 earnings easily surpassed Kenanga Research’s estimate, which was already 10% above consensus.
