PETALING JAYA: Hap Seng Plantations Holdings Bhd
is expected to be a big beneficiary of the current elevated crude palm oil (CPO) price environment, together with a healthy fresh fruit bunch (FFB) recovery in the future.
RHB Research said being a pure upstream player, Hap Seng Plantations is sensitive to CPO prices, but remained resilient even when CPO prices retreated.
It labelled the group as an undervalued proxy to higher CPO prices.
“As such, we expect it to perform well in the near term, where we estimate CPO prices to settle at RM4,200 to RM4,500 per tonne, suggesting further upside from the current year-to-date average,” the research house added.
It said this will be driven by the high correlation between crude oil and CPO prices, underpinned by the implementation of the B50 mandate on July 1, 2026.
As for the FFB growth recovery, while Hap Seng Plantations’ output has been uncertain, in the first four months of 2026, its FFB output recorded a growth of 11.4% year-on-year (y-o-y).
“We expect 2026 to see output recovering by 10% yearly, slightly lower than management guidance of 16% to 17% to be conservative, on better weather conditions.
“We expect the 2027 to 2028 forecast to record a steady growth of 5% y-o-y per annum,” RHB Research said.
Furthermore, as 19% of trees have yet to reach prime mature age, this will continue to boost FFB growth.
With that, the research house said it initiated coverage on the stock with a target price of RM2.60 by pegging it to 12 times financial year 2026 price-to-earnings, which is at its five-year historical mean.
“We believe Hap Seng Plantations deserves to trade at a premium to Sarawak-based planters, but at a slight discount to Johor Plantations Group Bhd, due to the former’s older age profile.”
