PETALING JAYA: SD Guthrie Bhd
is largely expected to post stronger upstream earnings for the second half of the financial year 2026 (2H26), buoyed by strong crude palm oil (CPO) prices, firm downstream activities and additional land monetisation disposal gains.
This follows the group’s recent commendable 1H26 results, which came in within market expectations.
CGS International (CGSI) Research, which reiterated an “add” call on SD Guthrie, said the group – the largest plantation company by planted area within its regional coverage – stands to benefit from higher CPO average selling prices (ASPs), ongoing non-core asset monetisation and potential upside from renewable energy and industrial park ventures.
The management expects progressively drier conditions in Malaysia and Indonesia from August to September, supporting forecasts that a strong El Nino could develop in 2H26.
Based on historical data, the impact on fresh fruit bunch (FFB) yields would likely emerge in 2H27 or 1H28.
It added that water availability remains adequate across its Malaysian estates, although prolonged dry weather in Kalimantan, Indonesia, warrants close monitoring. For context, approximately 60% of SD Guthrie’s Indonesian estates are located in Kalimantan.
According to CGSI Research, the group’s upstream segment would benefit from higher CPO prices in 2H26, amid supply risks from the current dry spell and the potential development of a strong El Nino.
In the meantime, MBSB Research maintained a “buy” call on SD Guthrie with a revised target price of RM7.65, incorporating higher CPO price assumptions for FY26 to FY27.
“Our conviction is reinforced by resilient Asia-Pacific bulk operations and recurring land monetisation gains of at least RM500mil per annum over the next five years,” the research house said in a recent report.
It noted the group’s upstream prospects are equally encouraging, with FFB yields recovering towards 17 tonnes to 22 tonnes per ha through 1H27, while largely secured fertiliser requirements provide better cost visibility despite elevated input prices.
Hence, MBSB Research has raised the FY26 to FY28 earnings forecasts by 2.5%, 5.5% and 12% to RM2.83bil, RM2.78bil and RM2.4bil, respectively.
This reflects revised CPO ASPs of RM4,400 to RM4,350 per tonne, an approximate 20% oil extraction rate, modest FFB growth and recurring land disposal gains of at least RM500mil per annum, partly offset by higher production costs of about RM2,700 to RM2,600 per tonne amid elevated fertiliser prices.
In a note to clients, Kenanga Research said SD Guthrie’s upstream earnings look set to improve in 2H26 from better selling prices as well as fruit output, as typically 52% of the group’s annual output is from the second half.
Moreover, elevated CPO prices can be expected for the rest of 2026 due to higher biodiesel demand and the Middle East conflict, while supply faces further weather disruptions.
SD Guthrie has sold forward 76% of 2H26 harvest at around RM4,400 per tonne, which is above Kenanga Research’s estimate of RM4,350 for FY26, and RM4,450 per tonne for FY27.
“As such, we are revising up FY26 and FY27 CPO prices to RM4,450 and RM4,700 per tonne, respectively, for SD Guthrie,” it said.
Meanwhile, an analyst with a local brokerage firm said SD Guthrie has a rich defensive balance sheet, and it is currently unlocking value by venturing into industrial property.
However, the long-term push for higher productivity will take time, and upstream acquisition or expansion may have to wait, as dividend payouts and debt repayment may take higher priority for another two to three years.
