PETALING JAYA: Earnings at Kuala Lumpur Kepong Bhd
(KLK) for the first quarter of financial year 2026 (1Q26) were broadly in line with consensus estimates.
However, research houses expect a weaker quarter ahead on slower output and a flattish crude palm oil (CPO) price trend and potentially equity accounting of its associate Synthomer plc losses.
Based on UK-listed Synthomer recent weak share price, Maybank Investment Bank Research (Maybank IB) said it “suggests the company’s outlook remains challenging in the near term”.
KLK’s 1Q26 core earnings rose 56.6% quarter-on-quarter to RM314.2mil on the back of better-than-expected fresh fruit bunch (FFB) output and lower-than-expected CPO production cost at the plantation segment.
However, on a year-to-year basis, earnings were down 15.6%.
The group’s manufacturing returned to the black in 1Q following a turnaround from oleo and refineries divisions.
“However, it remains uncertain if the division’s strong performance could be repeated in the coming quarter,” said Maybank IB.
The research house has a “hold” call on the stock, indicating an expected total return of 0% to 10% over the next 12 months, including dividends.
It also kept the target price at RM20.30, based on a 19 times financial year 2026 (FY26) estimated price-to-earnings, which is 0.5 standard deviations below its seven-year average.
Moreover, KLK’s management anticipates CPO prices to hover at RM4,000 to RM4,300 per tonne for the January to March period, underpinned by the likelihood of higher Indonesian export levies in March 2026.
However, it believes the upside in CPO prices may be limited due to ample global edible oil supply.
Meanwhile, Hong Leong Investment Bank (HLIB) Research has upgraded the stock to a “buy” with a higher target price of RM21.48 as valuations have turned more palatable following recent share price retracement.
The research house said the first quarter results surpassed its expectation, accounting for 29.6% of its full-year estimate.
Against consensus, the results were broadly in line, representing 24.1% of the full-year consensus estimate.
“We raise our FY26 to FY28 core earnings forecasts by 14.4%, 13.9% and 7.3%, mainly reflecting higher FFB yields and lower CPO production costs at the plantation segment,” HLIB Research said.
Shares of KLK were trading at RM19.20 yesterday.
