PETALING JAYA: TSH Resources Bhd
is expected to continue facing challenges from its ageing oil palm trees, which have contributed to a decline in fresh fruit bunch (FFB) production.
AmInvestment Bank Research said comparing the group’s first half of the financial year 2026 (1H26) earnings against 1H25, core net profit sank by 21.6% to RM74.9mil as FFB output tumbled by 7%.
The research house attributed the fall in FFB production to tree stress and ageing oil palm trees.
“TSH’s FFB output has been falling since FY22.
“Going forward, we believe that TSH would be carrying out new plantings of oil palm of 500ha to 1,000ha.
“The cost of new plantings are about RM20,000 per ha to RM30,000 per ha,” the research house said in a report yesterday.
AmInvestment Bank Research said it increased TSH’s financial year 2027 (FY27) net earnings by 4% to account for a higher average crude palm oil (CPO) price assumption of RM4,450 per tonne compared to RM4,050 per tonne originally.
The research house said it reckoned that a super El Nino and Indonesia’s B50 biodiesel policy would support CPO prices in 2027.
AmInvestment Bank Research said the group’s palm earnings before interest and taxes revenue plunged by 53% year-on-year (y-o-y) to RM243.2mil in 1H26. This was due to a fall in CPO price and production.
“We believe the cost of production per tonne was also higher in 1H26.
“Average CPO price realised slid to RM3,556 per tonne in 1H26 from RM3,932 per tonne in 1H25. FFB production fell by 7% y-o-y in 1H26,” the research house added.
AmInvestment Bank Research maintained a “hold” call on TSH with a target price of RM1.32 per share based on a FY27 price-to-earnings multiple of 12 times, from RM1.27 per share previously.
“We applied a discount due to the group’s ageing oil palm trees. We think that 8% to 10% of the group’s oil palm trees are more than 20 years old.”
Meanwhile, Kenanga Research said while TSH’s 1H26 core net profit was lower y-o-y due to a very weak first quarter of FY26 (1Q26), it still came in 5% above its forecast and 29% higher than consensus estimates.
“Furthermore, 2Q26 core net profit recovered well and we expect the momentum to continue into 2H26 and FY27 from higher CPO prices.”
Kenanga Research said it sees a brighter outlook for TSH in 2H26 and FY27.
The research house said the edible oil world began the year with tightness concern which worsened following the Middle East conflict due to rising bio-diesel demand.
“Further supply disruption looks likely due to a very likely ‘very strong’ El Nino in 4Q26/1Q27; hence, elevated CPO prices can be expected.
“We are raising our 2026 CPO price assumptions from RM4,400 per tonne to RM4,500 and 2027 from RM4,450 to RM4,700.
“Meanwhile, cost should stay contained, thanks to good palm kernel prices while fertiliser prices may be stabilising,” the research house said.
Kenanga Research said TSH is among the rare planter still developing new oil palm area meaningfully.
It can expand by more than 40% once its existing 15,000 ha – which is already approved for oil palm – is fully planted up.
