Hap Seng Plantations Holdings Bhd - Output Recovery Expected in 2H
Thu, 28-Aug-2025 08:09 am
by Steven Chong • Apex Research

Counter

HSPLANT (5138)

Target Price (RM)

2.10

Recommendation

Hold

  • HAPL recorded CNP of RM30.1m (-23.1% QoQ, -6.3% YoY) in 2QFY25, bringing 6MF25 CNP to RM69.3m (+22.9% YoY), accounting for 44% of our full-year forecast and consensus estimate. We consider the results to be within expectations, as we anticipate earnings momentum to strengthen in 3QFY25 on the back of higher FFB output and firmer CPO prices.

  • FFB production stood at 277k mt, meeting our forecast at 41.2%. We expect output to regain momentum as it enters into peak harvest season.

  • Re-iterate our HOLD call with a higher TP of RM2.10 (previously RM2.00), after rolling forward our valuation base year to FY26F. Our revised TP is derived from applying a higher P/E multiple of 10.9x (vs. 10.2x previously), in line with the updated 3-year historical trading average.

 

Results within expectations. 6MFY25 CNP came in at RM69.3m (excluding FV loss on biological assets of RM27.1m), accounting for 44% of our full-year forecast and consensus estimate. We consider the results to be within expectations, as we anticipate earnings momentum to strengthen in 3QFY25 on the back of higher FFB output and firmer CPO prices.

 

YoY. CNP came in at RM30.1m, down 6.3% YoY, dragged by softer sales volume of CPO (-20.5% YoY) and PK (-1.7% YoY). Revenue contracted 14.6% to RM156.1m, reflecting lower offtake despite higher realised prices for both CPO and PK.

 

QoQ. CNP fell 23.1% QoQ, on the back of softer ASPs, with CPO prices averaging RM4,260/mt (-12.5% QoQ) and PK at RM3,471/mt (-7.2% QoQ). Revenue slid 13.0% in line with the weaker prices.

 

Outlook. YTD production stood at 277k mt or 41.2% of our full-year forecast, partly dampened by wet weather. We expect volumes to recover in 2HFY25 as Aug–Oct typically marks the peak harvest cycle for Sabah estates, enabling HAPL to catch up on its target. With fertiliser application front-loaded in 1HFY25, unit cost should stay contained. Management guided for FY25 unit cost of c.RM2,223/mt (vs. RM2,305 in FY24), underpinned by lower fertiliser prices and stronger output.

 

Earnings Revision. We keep our forecast unchanged as we expect earnings momentum to pick up in 3QFY25, underpinned by higher FFB output and firmer CPO prices.

 

Valuation. Re-iterate our HOLD call with a higher target price of RM2.10 (previously RM2.00), after rolling forward our valuation base year to FY26F. Our revised TP is derived from applying a higher P/E multiple of 10.9x (vs. 10.2x previously), in line with the updated 3-year historical trading average. We continue to apply a 0% ESG adjustment with three-star ESG rating.

 

Risks. EU export ban and regulations, changing weather patterns affect FFB production, taxation and export ban in Indonesia threatens local CPO demand, shortage of labours and rising operational cost, increased competition from alternative vegetable oils.

Read more details in:

Disclaimer

The report is for internal and private circulation only and shall not be reproduced either in part or otherwise without the prior written consent of Apex Securities Berhad. The opinions and information contained herein are based on available data believed to be reliable. It is not to be construed as an offer, invitation or solicitation to buy or sell the securities covered by this report.

Opinions, estimates and projections in this report constitute the current judgment of the author. They do not necessarily reflect the opinion of Apex Securities Berhad and are subject to change without notice. Apex Securities Berhad has no obligation to update, modify or amend this report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate.

Apex Securities Berhad does not warrant the accuracy of anything stated herein in any manner whatsoever and no reliance upon such statement by anyone shall give rise to any claim whatsoever against Apex Securities Berhad. Apex Securities Berhad may from time to time have an interest in the company mentioned by this report. This report may not be reproduced, copied or circulated without the prior written approval of Apex Securities Berhad.

Market Mover
Settlement Rates
Currency Buy Rates (RM) Sell Rates (RM)
USD 4.216494 4.249912
EUR 4.923595 4.928588
CNY 0.592163 0.592763
HKD 0.540426 0.544215
SGD 3.273679 3.296901