PETALING JAYA: Coconuts are set to be the next big thing for IOI Corp Bhd
, as it targets 5,000 ha of coconut plantation by financial year 2026 (FY26) and FY27 – making it the largest coconut planter in the country.
The company began its venture last year, planting some 485 ha of coconuts.
In November 2025, the group formed a joint venture with Singaporean-based Mega Star Holding Pte Ltd to develop a coconut processing complex in Segamat, Johor, with a total estimated investment of RM100mil. Commissioning is set to begin in the first half of 2028.
In a report, CGS International Securities (CGSI) Research said Phase 1 of the complex will be able to process 100,000 coconuts daily, while Phase 2 will increase capacity to 300,000 per day.
“We project that once the coconut processing complex is completed, it would contribute RM70mil to RM80mil in pre-tax profit, a meaningful 3% to FY28’s profit before tax,” the research house noted.
On its downstream segment, IOI Corp’s oleochemical business is expected to recover in the coming quarters after a turnaround in the first quarter of 2026.
“Although oleo prices have softened in Indonesia, we expect IOI Corp’s margins to hold up well given its limited presence in Indonesia and strong customer stickiness.”
However, CGSI Research cautioned that the refineries sub-segment may remain challenging amid industry overcapacity in Indonesia and high raw material prices.
As for its upstream business, the research house said performance will likely stay resilient this year, as IOI Corp’s management expects a 5% to 10% year-on-year growth in fresh fruit bunches (FFB).
The research house said this is broadly in line with its 6% forecast, driven by a rising proportion of planted trees entering prime age and maturing young palm trees.
Productivity has improved, with FFB and oil yields growing at a 5% compounded annual growth rate in FY22 to FY25.
“Given the improving yields, solid production growth and higher crude palm oil (CPO) average selling prices, we expect strong plantation earnings in FY26 to FY27, with upstream margins improving further in the second half of 2026 following a 6% half-on-half decline in fertiliser costs which IOI tendered in December 2025.”
CGSI Research kept its “maintain” call on IOI Corp with an unchanged target price of RM4.65, supported by the company’s limited Indonesia exposure and higher-than-peers downstream margin.
“Re-rating catalysts are a sudden spike in CPO prices and mergers and acquisitions. Downside risks include lower-than-expected FFB production and unfavourable changes in Indonesia’s palm oil policy.”
