PETALING JAYA: Malaysia’s plastic packaging sector is expected to see improved results for the second quarter of financial year 2026 (2Q26) on the back of higher profits from heightened average selling prices, increased orders from stockpiling in recent months, and new customer acquisitions due to existing suppliers declaring “force majeure”.
Kenanga Research, which maintained its “overweight” call on the sector, said it anticipates Brent oil prices to average at US$80 (RM326) in 2026 and US$74 for 2027, and does not see oil prices falling back to its pre-Middle East conflict levels even if de-escalation occurs.
Elevated oil prices in 2Q26 arising from Middle East tensions have led to a spike in resin prices by about 80% or more on average, though there has been a gradual normalisation since late May 2026, according to the research house.
Higher resin prices have historically translated to stronger operating profit for the plastic packaging sector, given a cost-plus business model, it added.
Based on its sensitivity analysis, a 1% rise in resin prices could improve the plastic packaging sector’s profitability by an estimated 0.3%.
Moreover, a shortage of resin and plastic packaging supplies as a result of war damage in certain oil production facilities in the Middle East and blockade constraining crude oil delivery has resulted in a panic-buying induced demand spike among business owners, driving increased customer orders since March 2026.
As many plastic packaging players are predicted to have around two to three months of inventories, the research house said the sector could see higher profits for a quarter or two.
This would be due to manufacturers buying at cheaper rates and selling higher cost-plus prices now, and better order volumes as customers intensify purchases in anticipation of further price hikes, it noted.
It also highlighted that there is typically about one to two months’ time lag between purchase orders and revenue recognition upon order delivery.
“Hence, the inventory gains and the potential margin expansions from higher average selling prices will mostly be reflected in the upcoming 2Q26 results,” Kenanga Research said.
Additionally, it said there is opportunity for plastic packaging players to gain market share, as some producers have seen new customers approach them after facing “force majeure” from their existing suppliers.
“The energy crisis aforementioned has offered a major turning point for the few established plastic packaging manufacturers who are financially strong in Malaysia,” it said.
Kenanga Research has retained Thong Guan Industries Bhd
and BP Plastics Holding Bhd as its sector picks.
