PETALING JAYA: Hap Seng Plantations Holdings Bhd
’s earnings will remain highly sensitive to crude palm oil (CPO) price movements, given its pure upstream planter exposure and reliance on CPO and palm kernel (PK) production volumes and average selling prices, analysts say.
The planter posted a first-quarter of financial year 2026 (1Q26) core net profit of RM35.1mil, down 34.3% quarter-on-quarter and easing 0.8% year-on-year (y-o-y), which was broadly within market expectations.
With CPO prices expected to remain above RM4,300 per tonne, Phillip Capital Research said in a note to clients that ongoing price volatility and cost pressures may continue to weigh on Hap Seng Plantations’ margins amid softer crop productivity.
Higher fertiliser, diesel and logistics costs will remain as key risks.
However, near-term cost pressures should remain manageable as Hap Seng Plantations has already secured fertiliser supply for 2026, partially offset by firmer CPO price expectations, according to the research house.
Phillip Capital Research raised its 2026 to 2028 earnings per share forecasts on Hap Seng Plantations by 1% to 16%, after incorporating higher palm product prices and operating cost assumptions.
It has also upgraded the stock to a “hold” with a higher target price (TP) of RM2.06 from RM1.89 previously.
In a report, Apex Securities Research said: “Higher CPO prices of RM4,400 per tonne and y-o-y improvements in fresh fruit bunch (FFB) production lead us to be optimistic on the group’s topline performance for the financial year 2026 (FY26) to FY27.”
Although increases in diesel costs could weigh on performance, the research house believes that rising operating costs should be offset by expected increases in CPO and PK sales volumes – owing to seasonal FFB production improvements in addition to elevated CPO prices.
It has reiterated a “buy” call on the stock with an unchanged TP at RM2.80.
The risks to its call include the European Union export ban and regulations, changing weather patterns affecting FFB production, taxation and export bans in Indonesia threatening local CPO demand, labour shortages, rising operational costs, and increased competition from alternative vegetable oils.
Kenanga Research said Hap Seng Plantations possesses strong defensive net cash holdings, a good dividend payout record and sustainable income, which are the group’s key investment appeals.
However, the annual dividend may remain soft in light of the recent reported 1Q26 lower earnings results.
The research house – which kept the stock’s TP at RM1.95 – has also maintained an “underperform” call, pending Hap Seng Plantations’ results briefing tomorrow.
Meanwhile, an analyst with a local bank-backed brokerage continues to favour Hap Seng Plantations for its strong balance sheet (net cash and net cash per share of RM665.1mil and 83.1 sen respectively as at March 31, 2026), and decent valuations at RM2.18.
Hong Leong Investment Bank Research said it has trimmed the group’s FY26, FY27 and FY28 core earnings forecasts marginally by 0.4%, 0.7% and 0.5% respectively, following a recalibration of the earnings model based on the latest annual report.
Post-earnings revision, the research house maintained a “buy” call on the stock with a slightly lower TP at RM2.88 per share.
