PETALING JAYA: SD Guthrie Bhd
remains a defensive stock with a deeply undervalued landbank, which the integrated plantation group is selectively unlocking moving forward, says Kenanga Research.
Together with the pursuit of upstream productivity and efficiency gains, SD Guthrie should see improving return on equity (ROE) over the coming years, as well as debt repayment and potentially higher dividend payouts.
However, Kenanga Research, in a note to clients, said: “We do not see strong growth over the coming two to three years given the scale of its operations about 703,000 ha and maturity of the palm oil sector.”
Hence, the research house kept its “market perform” call on SD Guthrie with a target price of RM5.90.
On the recent conclusion of the group’s disposal of 942 acres of land for RM815mil, Kenanga Research said SD Guthrie’s management has guided for an estimated disposal gain of RM364mil, adding that the current announcement only indicated that the proposed disposal to Eco Business Park 8 (EPB8) in Kulai, Johor has turned unconditional on June 11, 2026.
Actual completion of the sale and purchase agreement hinges on the payment of the remaining 85% of the consideration (a 15% deposit was settled earlier).
“As such, we are not clear whether the disposal gain will be reported in the second quarter of financial year 2026 (2Q26) or 3Q26 as EPB8 has three months to settle the remaining 85% consideration starting June 11, 2026,” the research house pointed out.
Back in November and December 2025, SD Guthrie announced the disposal of 942 acres of land in Kulai to EBP 8 for RM815mil. EBP8 is a joint-venture comprising three partners – 45% under SD Guthrie, 45% under Eco World Development Group Bhd and 10% under Permodalan Darul Ta’zim, a wholly-owned company of the Johor state government.
EPB8 will develop the 942 acres into an industrial park, to be called Eco Business Park VIII, a 10-year project with an estimated gross development value of RM3.75bil.
Given its location within the Johor-Singapore Special Economic Zone, the project has good connectivity to Senai Airport, major highways and ports.
According to an analyst with a local brokerage firm, SD Guthrie’s earnings for financial year 2026 (FY26) to FY27 are maintained as “our forecasts have already imputed land disposal gains amounting to RM500mil to RM600mil each year.”
Among the larger integrated planters, the group reported a five-year average ROE of 12% is comparable to sector leader IOI Corp Bhd at 12% and beats Kuala Lumpur Kepong Bhd (KLK) at 10%.
“However, adjusting out lumpy disposal gains, SD Guthrie’s core ROE of 8% is still a tad below KLK (9%) and IOI (12%),” the analyst added.
The risks to SD Guthrie include Western hostility towards palm oil on sustainability and bio-diversity issues, impact of weather and labour shortages on production, weak selling prices and cost inflation.
