PETALING JAYA: Fertiliser remains the key cost pressure point for Sarawak Plantation Bhd
, with urea prices having more than doubled and muriate of potash prices up about 30%.
However, earnings impact should be partially mitigated as about 60% of the group’s fertiliser requirements for this year were secured earlier at lower prices, stated Phillip Capital Research.
It added that the impact of diesel cost inflation is relatively modest.
“As such, we maintain our 2026 to 2028 cost assumptions, as our forecast already incorporates a more conservative cost outlook relative to historical trends.”
Earlier, the management of Sarawak Plantation had raised its 2026 crude palm oil production cost guidance to about RM2,600 per tonne from RM2,300 to RM2,400 due to lower production assumptions and higher fertiliser and diesel costs.
The management also lowered its 2026 fresh fruit bunch (FFB) production guidance to approximately 410,000 tonnes from 420,000 tonnes previously.
This was following weaker-than-expected weather conditions in early 2026.
Dry conditions across Sarawak since March 2026 have resulted in slower fruit ripening and isolated false ripening cases.
Phillip Capital Research kept the 2026 production forecast as its estimates already factor in a cautious crop recovery and weather-related disruptions.
“Cumulative FFB output in the first five months of 2026 remained ahead of last year, supported by contributions from newly matured areas.
“Looking ahead, management is targeting approximately 500,000 tonnes of FFB production in 2027 despite factoring in about 5% weather impact.
“Reflecting improving estate maturity profiles and lower replanting intensity, we raise our 2027 FFB production forecast to approximately 437,000 tonnes.”
Factoring in higher production assumptions, Phillip Capital Research raised its earnings per share estimate for 2027 by 15%.
Following the earnings revisions, the 12-month target price was also raised to RM3.87 from RM3.38 previously.
