PETALING JAYA: Following replanting of 4,220 ha in 2024 and 3,200 ha in 2025, Sarawak Plantation Bhd
expects replanting activity to taper off to 1,000 ha in 2026, about 1,600 ha in 2027, and about 200 ha in 2028, with minimal replanting thereafter, according to Phillip Capital Research.
The research house also added that the company’s management aims to double fresh fruit bunches (FFB) production to about 361,000 tonnes by 2030, underpinned by a more mature age profile and the completion of the group’s reinvestment cycle.
Phillip Capital said the planter at the same time benefits from an agricultural replanting allowance, which helps lower the effective tax rate and enhance cash flow efficiency.
In a recent meeting with the company’s management, the research house said it was upbeat about the group’s production recovery trajectory, as 2025 FFB production came in at 361,000 tonnes, within management’s initial target of 355,000 to 363,000 tonnes.
Operationally, the company recorded its strongest quarter in the fourth quarter of financial year 2025 (4Q25), with FFB production rising to 116,000 tonnes (3Q25: 91,000 tonnes), lifting total 2025 production to 360,993 tonnes.
“The stronger performance was attributable to a shift in peak crop from 3Q to 4Q.
Total hectarage stands at 20.6,000 ha, of which 20,134 ha are mature with an average tree age of 8.5 years.
“Looking ahead, 1Q26 production is expected to normalise sequentially from the exceptionally strong 4Q25 due to a seasonal slowdown.
“Structural cost improvements, easing replanting requirements, and stable logistics costs should support earnings resilience,” the research house noted.
Management expects unit production cost to decline to about RM2,400 per tonne in 2026 and about RM2,200 per tonne in 2027 on higher production volumes and improved operating efficiency.
Fertiliser application is expected to increase by more than 20% in 2026, primarily driven by higher application intensity rather than a sharp escalation in fertiliser prices, the research house added.
Phillip Capital is maintaining its “hold” rating with an unchanged 12-month target price of RM3.25.
“We see ongoing production recovery, improved cost visibility, and better fruit quality in 2026, should support the earnings trajectory. Nonetheless, near-term earnings remain exposed to crop seasonality and input cost normalisation.
“Key risks include production volatility, price swings in palm products, cost inflation, and regulatory uncertainties,” it added.
