PETALING JAYA: Analysts see IOI Corp Bhd
’s earnings outlook brightening as it heads into financial year 2027 (FY27), underpinned by higher average crude palm oil (CPO) prices and sustained fresh fruit bunch (FFB) output growth.
Hong Leong Investment Bank (HLIB) Research, RHB Research, and TA Research have all raised their earnings projections for the company following the release of its fourth quarter (4Q26) results.
The results were within expectations of the research houses as well as consensus estimates.
HLIB Research said the company’s 4Q26 core earnings jumped by 49.8% quarter-on-quarter and 23.9% year-on-year (y-o-y), taking the full year’s total to RM1.47bil, a 14.7% y-o-y rise.
The company also declared a second interim dividend per share (DPS) of seven sen, bringing FY26 DPS to 12.5 sen, which translates to a dividend yield of 2.7%.
The research firm revised its FY27-FY28 core earnings forecasts upwards by 9% and 7.2%, respectively, to reflect elevated average CPO price assumptions after sector-wide revisions, as well as higher earnings before interest and tax estimates in the manufacturing segment.
IOI Corp’s management expects strong CPO price momentum to persist into mid-2027, albeit with limited upside from current levels, and has locked in approximately 40% of its projected FY27 CPO production through forward sales, HLIB Research said.
Additionally, FFB production saw 4.2% growth to 2.96 million tonnes in FY26, and management predicts this growth trajectory to sustain into FY27, despite experiencing drier weather conditions.
Meanwhile, the research house said margin recovery is expected in the oleochemical sub-segment, despite a challenging environment for the manufacturing segment.
This is anticipated to be due to restocking activities amid geopolitical tensions and ahead of European Union Deforestation Regulation implementation, which should drive gradual improvement in oleochemical demand, it said.
HLIB Research has maintained its “buy” call on the stock, with a higher target price of RM5.10 per share.
RHB Research similarly projected that IOI Corp’s upstream earnings in FY27 would improve on elevated CPO prices and output, while further downstream profits, particularly oleochemical and specialty fats, should remain stable.
It expects oleochemical margins to stay robust due to the continued impact of the Middle East conflict and front-loading activities, even as refinery margins remain challenging.
The specialty fats segment, it added, should benefit from the recently completed New Orleans plant expansion and the new complex in Amsterdam which is set to be completed from the second half of FY27.
The research house increased its FY27 and FY28 earnings forecasts by 5.6% and 1.4%, and maintained its “buy” rating on IOI Corp with a new target price of RM5.45.
TA Research also kept its “buy” recommendation on the stock, raising its target price to RM5.36 from RM4.98 previously.
This was based on a higher 2027 target price-to-earnings of 20 times and a 3% environmental, social and governance premium, to reflect the company’s “improving earnings visibility, resilient upstream fundamentals and stronger FY27 earnings outlook”.
TA Research also raised its FY27 and FY28 earnings forecasts by 4% and 0.7%, respectively, after factoring in FY26 results and higher associate contributions.
