PETALING JAYA: Integrated plantation outfit Kim Loong Resources Bhd
is guiding for stronger crude palm oil (CPO) prices to cushion lower fresh fruit bunch (FFB) production for the financial year ending Jan 31, 2027 (FY27).
The company, which released second quarter ended July 31, 2026 (2Q27) results on Tuesday, expects CPO prices to average between RM4,500 and RM4,800 per tonne for FY27 and buffer FFB production, which it has revised 6% lower year-on-year (y-o-y) to 310,000 tonnes.
TA Research said the company’s 2Q27 results came in within expectations. “Stripping out non-core items, core net profit declined 9.4% y-o-y to RM43.5mil, while revenue fell 3.1% y-n-y to RM422.8mil.
“The softer performance was mainly due to lower FFB production and CPO sales volume,” it said.
An interim single-tier dividend of five sen per share was also announced.
“For the first half of FY27 (1H27), cumulative core net profit rose 5.1% y-o-y to RM93.6mil, while revenue increased 2.9% y-on-y to RM872.4mil.
“The stronger milling contribution, supported by better processing efficiency and a higher oil extraction rate, helped offset weaker plantation earnings,” it added.
Kim Loong’s 1H27 plantation profit declined 24.1% to RM65.1mil mainly due to a 17.8% decline in FFB production to 136,900 tonnes, while FFB yield fell 16.4% to 9,850 tonnes per hectare, although the impact was partly cushioned by a 5.3% increase in the average FFB selling price to RM893 a tonne.
Milling profit increased 39.7% to RM78.8mil in the first half, supported by better processing efficiency and a higher oil extraction rate (OER).
The average CPO selling price rose 3.2% to RM4,426 per tonne, while CPO sales volume was broadly flat at 157,900 tonnes despite a 3.4% decline in production.
OER improved to 21.12% from 20.41% a year ago. While the brokerage remains positive on CPO prices, it has downgraded Kim Loong to a “sell” from “buy” but with an unchanged target price of RM2.82 based on a 2027 price-to-earnings ratio of 16 times.
“The downgrade mainly reflects its limited upside potential following the recent share price appreciation,” it said, adding that a combination of firm energy prices, Indonesia’s B50 mandate and stronger Indian festive demand would support CPO prices.
However, it cautioned that seasonally stronger production and competitive soybean oil prices would cap CPO upside in 2H26.
