PETALING JAYA: Despite persistent downstream headwinds, stronger crude palm oil (CPO) prices are expected to underpin SD Guthrie Bhd
’s earnings in the coming quarters.
The plantation outfit saw its core net profit down 30% year-on-year (y-o-y) and 18% quarter-on-quarter (q-o-q) to RM386mil in the first quarter ended March 31, 2026 (1Q26).
Despite the weaker performance, CGS International (CGSI) Research said the results “were within expectations”, as it anticipates higher upstream earnings in second half of financial year 2026 driven by firmer CPO prices and improved production, alongside sustained momentum in the company’s industrial development segment.
“In 1Q26, we saw softer performance in the upstream segment, impacted by lower realised CPO average selling price (ASP) as well as a decline in fresh fruit bunches production due to seasonality and adverse weather conditions.
“We also note some cost pressures in its Malaysia upstream operations, driven by front-loaded upkeep, with operating profit margins easing from 26% in 1Q25 to 13% in 1Q26,” it said in a note to clients.
However, it projects a stronger CPO price and normalising costs of production in 2Q26, alongside a recovery in yield.
Downstream margins, meanwhile, are expected to be lower q-o-q and y-o-y in 2Q26 due to an increase in feedstock prices, higher logistics costs and subdued demand.
Post-1Q26 earnings reports indicate that most analysts remain constructive on the counter.
CGSI Research is among the more bullish, with a target price of RM7.40.
RHB Research said valuations remained attractive at 19 times 2026 (versus peers’ 17 to 20 times) backed by SD Guthrie’s monetisation and diversification strategies.
In its report, RHB Research noted that the company had almost fully sold forward its Malaysian output at RM4,380 in the 2Q as compared to its CPO ASP of RM4,115 per tonne in 1Q26.
Meanwhile, for 3Q, the company has locked in over 60% of sales at RM4,400 per tonne, while for 4Q, about 30% has been sold at RM4,500.
Cost-wise, it has procured FY26 fertiliser requirements at prices 1% to 3% higher y-o-y.
According to RHB Research, SD Guthrie also expects some impact from higher diesel costs, therefore raising unit cost guidance to RM2,700 per tonne from RM2,500 previously.
The company’s land monetisation momentum continues to accelerate.
Following RM160mil gains from the 253-acre Kulai land sale in 1Q26, CGSI Research said management expects to complete two more transactions in financial year 2026 – a 300-acre outright land sale in Port Dickson and a 935-acre joint development with EcoWorld in Kulai, Johor.
According to the research house, SD Guthrie remains confident it can meet its RM500mil to RM700mil annual land monetisation target.
Year-to-date 2026, the company has signed two memoranda of understanding with MBI Selangor to develop 7,500 acres of landbank, lifting its industrial development pipeline to 23,417 acres as of 1Q26.
A plantation analyst said the stock’s outlook will be supported by its ongoing efforts to diversify earnings drivers, particularly through expansion into renewable energy and industrial property development leveraging its prime landbank.
“Its balance sheet continues to strengthen, and the stock offers a decent dividend yield of about 3%,” the analyst added.
