UOBKH Research expects IOI Corp’s upstream division to continue performing well, supported by its plantation estates’ production momentum.
PETALING JAYA: IOI Corp Bhd
may get strong support from its upstream segment in its second quarter of the financial year 2026 (2Q26).
UOB Kay Hian (UOBKH) Research expected a sequentially higher core net profit of RM390mil to RM415mil, which is a 7% to 14% growth from the previous consecutive quarter.
Fresh fruit bunch production had risen 12% quarter-on-quarter (q-o-q) while crude palm oil (CPO) output increased by 16% q-o-q. The corresponding increase in sales volume could more than offset the decline in spot CPO prices.
In its downstream segment, the research house said the group could see comparable operating profit sequentially in 2Q26, with 1Q26’s results previously seeing a broad-based recovery across all sub-segments.
“Although processing margins may remain pressured by industry competition, this should be buffered by higher downstream sales volume, given its upstream segment’s higher output.
“We expect its oleochemical sub-segment to perform relatively better, with product margins having improved versus previous quarters while management has also flagged the acquisition of new customers recently,” it said.
UOBKH Research expected IOI Corp’s upstream division to continue performing well, supported by its plantation estates’ production momentum.
“Its production growth is likely to remain strong year-on-year in 3Q26, partly due to the previous year’s quarter low base, as fresh fruit bunch output was poor from January to February last year,” it said.
“However, we believe 3Q26’s results may be affected by a reduction in Malaysia’s CPO export duty from 10% to 9.5% this month and 9% in February, which will likely affect its downstream segment’s refining margins given the reduced feedstock price competitiveness versus Indonesia’s refiners,” the research house noted.
It also expected a reduction in CPO export duty rates to be temporary, since spot CPO prices had climbed to above RM4,050 per tonne.
