PETALING JAYA: United Malacca Bhd
is well positioned to benefit from any potential upside in crude palm oil (CPO) prices, given its status as a pure upstream plantation player, analysts say.
The planter recently posted a lower core net profit of RM28.2mil for the fourth quarter of financial year 2026 (FY26), due to lower palm oil prices, weaker fresh fruit bunch (FFB) output and higher production costs.
CIMB Research said in a note to clients that United Malacca’s Malaysian operations remain the group’s key earnings contributor, with a sizeable productivity gap at its Indonesian estates offering upside potential.
“United Malacca continues to stand out among its plantation peers, underpinned by a structural improvement in FFB yields that drove a strong 13.5% increase in FFB production in FY26,” CIMB Research added.
The brokerage noted that it had fine‑tuned FY27 and FY28 earnings forecasts by 1% and 2%, following the latest results.
For FY27, CIMB Research forecasts the group’s core net profit to rise 4.4% year‑on‑year to RM164.9mil, supported by higher CPO prices and stronger production, partly offset by rising operating costs.
“We have also updated our sum‑of‑parts (SOP) valuation to reflect the group’s latest net cash position, lifting our SOP‑based value to RM8.66 per share,” the brokerage said.
By applying a higher 20% holding‑company discount, up from 15% previously, to reflect the stock’s relatively low trading liquidity, CIMB Research has raised the stock’s target price by 10 sen to RM6.93 per share.
It maintained a “buy” call on United Malacca, noting that the planter remains well positioned to benefit from higher CPO prices while offering an undemanding FY27 forecast price‑to‑earnings ratio of 7.5 times, an attractive dividend yield of 3.7%, and a strong net cash position of RM287.8mil.
In a recent report, TA Research also kept its “buy” call on United Malacca, but set a lower target price of RM7.03, down from RM7.84 previously.
It believes the planter remains well positioned to benefit from any upside in CPO prices.
TA Research noted that United Malacca’s management has guided for flat FFB production from its Malaysian estates in FY27, mainly due to replanting activities and the impact of El Nino, while Indonesian operations are expected to deliver approximately 5% growth.
“We have reduced our FY27 and FY28 earnings estimates by 13.7% and 8.1%, respectively, after revising FFB growth and margin assumptions lower,” the research house said.
Meanwhile, an analyst with a local brokerage said: “We expect CPO prices to remain supported by Indonesia’s biodiesel mandate, with B50 offering further upside to domestic palm oil consumption.”
Although easing geopolitical tensions have moderated the recent oil price rally, the analyst noted that uncertainties surrounding Indonesia’s export framework could continue to underpin prices by tightening export availability and increasing volatility.
However, the analyst maintained a positive view on the plantation sector, given the favourable demand and supply dynamics.
