KUALA LUMPUR: Kenanga Investment Bank Bhd
expects crude palm oil (CPO) to trade around RM4,000 per tonne over 2026 from RM4,308 in 2025 on the back of a still-tight global edible oil supply despite a supply uptick with inventories unlikely to improve significantly.
The investment bank said in a research note today some cost uptick is due but upstream margin is expected to stay contained.
"Downstream visibility remains poor but more meaningful non-plantation contributions from property and renewable energy can be expected. Hence, among integrated plantation groups, enhancing asset yields is now increasingly the focus,” the investment bank said.
It said poor Indonesian yields in 2024 had driven CPO prices to RM4,700-4,800 per tonne over the fourth quarter of 2024 (4Q 2024) and 1Q 2025, with prices settling to around RM4,000 since.
"Indonesia's recent stance to maintain its B40 biodiesel and delay adopting a B50 admixture beyond mid-2026 also supports our cautious price outlook,” it said.
Kenanga has a "neutral” call on the sector.
"Limited growth and upside catalyst is balanced off by healthy profits, and a balance sheet with undemanding valuations.
"Smaller players offer good value but larger integrated and diversified players may better endure softer palm oil prices,” it said.
Its top picks are Kuala Lumpur Kepong Bhd with a target price (TP) of RM24.00 per share for better fresh fruit bunch output and property earnings; PPB Group Bhd (TP: RM12.50 per share) given its earnings recovery amid low valuation; and TSH Resources Bhd (TP: RM1.55 per share) from organic upstream growth. - Bernama
