PETALING JAYA: Higher crude palm oil (CPO) production cost is expected to drag Genting Plantations Bhd
’s performance in the second half of financial year 2026 (2H26).
Hong Leong Investment Bank (HLIB) Research said it deemed the group’s 1H26 core earnings of RM201.6mil within expectations as it anticipates Genting Plantations to be affected by higher CPO costs in the next half of the year.
The group’s second quarter of financial year 2026 (2Q26) core earnings of RM140.4mil took 1H26’s total sum to RM201.6mil, accounting for 54.9% to 56% of HLIB Research’s and consensus full-year estimates.
“On a year-on-year (y-o-y) basis, 2Q26 core earnings tripled to RM140.4mil, lifted mainly by higher fresh fruit bunch (FFB) production at the plantation segment and turnaround at the downstream segment (arising from higher sales volume and margin expansion).
“Genting Plantations’s seven-month period of 2026 FFB production rose 10.9% to 1.2 million tonnes, due mainly to favourable weather conditions.
“In light of the encouraging year-to-date production performance, management raised its FY26 FFB output growth guidance to 5% to 10% (from about 5% earlier),” the research house said in a report yesterday.
HLIB Research said management maintained its FY26 CPO production cost guidance (similar to FY25’s cost of about RM2,600 per tonne).
It added higher fertiliser costs, arising from higher fertiliser prices and application, are expected to be partly mitigated by higher FFB production in 2H26.
HLIB Research raised its FY26 to FY28 core earnings forecasts by 1%, 5.3% and 5.5% respectively, reflecting higher average CPO price assumptions following its earlier sectorwide upward revisions, partly offset by higher CPO production cost assumptions.
The research house maintained a “buy” call on Genting Plantations with a higher target price (TP) of RM6.02 based on a 14 times revised FY27 core earnings per share of 43 sen. Meanwhile, CIMB Research said Genting Plantations’ 2Q26 results exceeded expectations on stronger FFB production, which rose 9% y-o-y in 1H26. It said it expects stronger CPO prices and higher FFB production to drive Genting Plantations’s earnings growth in 2H26.
“We raise our FY26 and FY27 earnings forecasts by 18% to reflect our recent RM50 per tonne CPO price upgrades for both years and higher FY26 FFB output growth of 7%, up from 4% previously.”
CIMB Research upgraded its call for Genting Plantations to a “buy” from “hold” with a higher TP of RM6.40.
It said the upgrade was because it sees the stock as an attractive laggard play on stronger CPO prices.
