PETALING JAYA: CIMB Research expects SD Guthrie Bhd
’s core net profit to decline 32% on a quarterly basis to RM645mil on the back of lower land disposal gains that more than offset stronger upstream earnings.
In a report, the research house said this will bring the planter’s nine-month profit to RM2.14bil – 71% of its financial year 2026 (FY26) forecast.
However, the research house said it is confident in the planter’s ability to meet the 2026 financial year forecasts.
CIMB Research said this will be driven by higher fresh fruit bunch (FFB) production, which is up 8% both on a quarterly and yearly basis.
“Assuming flattish realised crude palm oil (CPO) and palm kernel prices, we estimate higher FFB production could contribute RM52mil in additional upstream profit before interest and tax (PBIT), based on the second quarter of FY26 (2Q26) unit profitability.”
CIMB Research reckoned the 3Q26 will see flat earnings from other divisions and a 25% marginal tax rate on the change in PBIT.
It also noted SD Guthrie’s disposal of its RM798mil Bukit Kerayong and RM419mil Kulai land is a positive one.
CIMB Research said it will maintain its FY26 industrial development net profit forecast of RM1.03bil, although profit delivery remains dependent on timely completion and recognition of land disposal gains.
With that, it said it will upgrade the stock to hold from “buy” – following a 17% share price correction from its peak offering a more attractive entry point ahead of a potential CPO price upcycle in 2027.
“We lower our sum-of-parts-based target price to RM6.52 from RM6.86, applying a 5% valuation discount to reflect heightened Indonesian regulatory risks.”
SD Guthrie expects Malaysian CPO production to remain broadly stable at 20 million tonnes in 2027.
It believes tighter Indonesian palm oil supplies ould support CPO prices above its FY27 assumption of RM4,550 per tonne, providing potential earnings upside.
CIMB Research said for the planter, key catalysts will include stronger-than-expected CPO prices and higher land-monetisation gains, while downside risks are delayed land disposals, rising fertiliser and labour costs, El Nino-related production weakness, and Indonesian regulatory scrutiny.
Meanwhile, for FY27 to FY28 earnings, CIMB Research pointed out the higher minimum wage to be implemented in June 2027 will likely impact the planter.
It noted this will raise the upstream costs particularly for general estate workers.
“Assuming most of its Malaysian estate workers are affected, our preliminary sensitivity analysis suggests potential net profit reductions of 2% and 3% in FY27 and FY28, respectively.”
