PETALING JAYA: Analysts remain positive about IOI Corp Bhd
’s prospects, given the group’s first-half of the financial year 2026 (1H26) results, which exceeded most consensus expectations.
IOI posted core earnings of RM790.4mil in 1H26, up 17.1% primarily due to better-than-expected fresh fruit bunch (FFB) output growth.
Hong Leong Investment Bank (HLIB) Research said in a report that it raised the group’s core earnings forecasts for the financial year 2026 (FY26), FY27 and FY28 by 7.3%, 5% and 5.9%, respectively, mainly to reflect higher FFB output assumptions.
Post-earnings revision, the brokerage firm has maintained a “buy” call on IOI with a higher target price (TP) of RM4.73 per share.
On its outlook, HLIB Research noted that IOI’s management expects the earnings resilience to sustain into 2H26, supported by FFB output growth and firm crude palm oil (CPO) prices.
On the other hand, the manufacturing segment’s operating environment will likely remain challenging, it added.
This is due to elevated inventory levels and intense competition from Indonesian producers at the refining sub-segment and subdued consumer sentiment, and competition from Indonesian producers in its oleochemical sub-segment.
In a note to clients, RHB Research said: “Going into 2H26, we expect IOI’s upstream earnings to continue doing well on the back of elevated CPO prices, while profits at its downstream division should stabilise.”
The research house has kept its “buy” call on the stock, with a higher TP at RM4.85 per share.
In addition, the stock’s valuation is attractive at 17 times 2026 price-to-earnings estimates, which is at the lower end of its peer range of 17 times to 20 times.
Going forward, an analyst with a bank-backed brokerage said IOI expects both segments to remain challenging, with the refinery segment also facing elevated inventory levels and intense competition from Indonesian producers, placing pressure on sales margins and volume.
However, this may be offset in the short-term by festive demand as well as strong contributions from its specialty fats associate coming from high cocoa butter equivalent margins, as seen by the associate pre-tax profit growth of 23% quarter-on-quarter in 2Q26.
RHB Research said it made minor tweaks to its IOI forecasts, including updating in-house foreign exchange assumptions, and applying the latest export and levy duties in Indonesia, while it update the latest net debt figure in its sum-of-parts valuation.
Meanwhile, Kenanga Research said IOI’s push into commercially driven sustainable ventures is among the boldest in the plantation sector.
While risk-taking, deep pockets and patience are required for such projects, the brokerage firm noted that “some may bear fruit soon”.
Kenanga Research, which has a “market perform” call on IOI, set a higher new target price of RM4.35 from RM4.20 previously.
As an investment case, it said IOI is pushing to nudge up estate productivity from using higher yielding materials to pro-active mechanisation, digitalisation and electrification to value adding, via specialty niches and strategic net-zero efforts.
However, reflecting on the CPO price trend, FY26 to FY27 earnings are expected to be flattish while the group’s share price is still within 10% of its share target price, said Kenanga Research.
