PETALING JAYA: Analysts expect Kim Loong Resources Bhd
’s business outlook to be generally positive over the next few years, supported by improving plantation productivity, strong milling operations and a healthy financial position.
An analyst noted that the company is expected to benefit from higher fresh fruit bunch (FFB) production as its palm estates mature and yield improvements take effect.
“This should help drive revenue growth and partially offset fluctuations in crude palm oil (CPO) prices,” he said.
Kim Loong is targeting approximately 5% year-on-year growth in FFB production in its current financial year ending Jan 31, 2027 (FY27).
Executive chairman Gooi Seong Lim said the target was set after considering the improved age profile of the group’s young productive palms and its ongoing replanting programme.
“As part of our plan to achieve long-term sustainability in FFB production, the group will continue its replanting programme and targets to replant about 700 ha in FY27,” he said in the company’s annual report.
For its milling operations, Gooi said the group is constructing its fourth palm oil mill in Pantu, Sarawak, with processing capacity of 60 tonnes of FFB per hour.
“The mill is expected to be commissioned in two years’ time and will enhance our processing capabilities to support future growth.”
On CPO price prospects, Gooi said: “Although the movement of CPO prices has been volatile, management expects the average CPO price for FY27 to stay in the range of RM4,000 to RM4,500 per tonne.
“At this price range, the group is well-positioned to deliver satisfactory financial results in FY27.”
Nevertheless, Gooi said CPO prices remain susceptible to currency fluctuations, demand and supply of substitute commodities, and policy changes in major importing and exporting countries.
“The management will continue to vigilantly monitor these developments and take appropriate measures to manage and mitigate the associated risks.
“Notwithstanding the challenging global environment marked by trade tensions, ongoing geopolitical conflicts and supply chain disruptions, the group remains resilient and committed to identifying growth opportunities through the disciplined execution of our prudent corporate strategies.”
For FY26, Kim Loong’s net profit rose to RM169.13mil from RM161.42mil in the previous corresponding period, while revenue grew to RM1.82bil from RM1.68bil.
AmInvestment Bank in a recent report said it expects the group to maintain an attractive dividend yield of more than 5% in the current FY27, despite an expected rise in capital expenditure (capex).
“This is due to Kim Loong’s strong net cash position of about RM453.5mil. Hence, we forecast a gross dividend per share of 15 sen in FY27 versus 14 sen in FY26.”
The research house said Kim Loong capex is forecast to increase to RM85mil in FY27 from RM42.5mil, as the group is building a RM100mil 60-tonne-per-hour palm oil mill in Sarawak.
“As the palm oil mill would only be completed at the end of 2027, earnings contribution would only come in FY29.
“Assuming an average utilisation rate of 50% and a milling profit of RM70 per tonne, we think that the mill would generate an earnings before interest of RM10mil in the first full year of operations.”
The research house said it has not yet factored this into its FY29 earnings forecast for Kim Loong.
