Kim Loong Resources Berhad - Growing momentum
Tue, 30-Sep-2025 08:43 am
by Steven Chong • Apex Research

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KMLOONG (5027)

Target Price (RM)

2.10

Recommendation

Hold

  • KMLOONG reported CNP of RM46.7m (+18.2% YoY, +17.1% QoQ) in 2QFY26, bringing 6MFY26 CNP to RM86.6m (+1.8% YoY), which was within expectations.

  • Management guidance remains unchanged, targeting 5–10% FFB growth and 1.6m MT processing throughput. We anticipate stronger earnings in 3QFY26 backed by higher FFB output and firmer CPO ASP.

  • Maintain our HOLD recommendation with unchanged target price of RM2.10, derived from applying a 13.1x P/E multiple to FY26F EPS.

 

Results within expectations. 6MFY26 CNP of RM86.6m (excluding FV gain on biological assets of RM2.5m and gain on derivatives of RM0.1m) came in within expectations, accounting for 54.5% of our full-year forecast and 53.4% of consensus estimates. 

 

YoY. 2QFY26 CNP stood at RM46.7m (+18.2% YoY), due to higher CPO sales volume coupled with stronger CPO average selling prices (ASP). Plantation segment’s EBIT rose +17.3% YoY to RM38.5m, in view of better FFB output (+6.2% YoY) and FFB ASP (+6.1% YoY). On top of that, milling segment’s EBIT rebounded 25.2% YoY to RM34.6m, thanks to higher processing margin. Quarterly revenue climbed 7.5% YoY to RM436.2m.

 

QoQ. Revenue (+5.9% QoQ) and CNP (+17.1% QoQ) both climbed on stronger FFB output ahead of the peak season, though plantation EBIT (-18.6% QoQ) declined on weaker FFB ASP (-12.4% QoQ). On the flip side, milling’s EBIT rebounded strongly (+59.1% QoQ) as OER normalised to 20.9% (from 19.8%). 

 

Dividend. Declared interim dividend of 5 sen per share. We expect another dividend of 10 sen per share to be declared in 2HFY26. As such, total dividend for FY26 could end up at 15 sen per share, which translates into a dividend yield of 6.4% based on current share price of RM2.33.

 

Outlook. FFB output came in at 86.9k MT, representing 52.6% of our forecast and 50.0% of management estimate. Looking ahead, we expect stronger earnings in the coming quarter on higher CPO production and firm ASP, alongside improved milling margins during the peak harvest season. Meanwhile, FFB intake for the milling operations is expected to be resilient at 1.6m MT, supported by the Group’s sustained high utilisation rate.

 

Earnings Revision. Given that the reported earnings are within expectations, we have kept our forecast unchanged.

 

Valuation. Maintain our HOLD recommendation with unchanged target price of RM2.10, derived from applying a 13.1x P/E multiple to FY26F EPS. Our valuation incorporates a neutral 0% ESG adjustment, reflecting the group’s three-star ESG rating.

 

Risk. EU export ban and regulations, changing weather patterns, taxation and export duty in Indonesia affects global supply, shortage of labours and rising operational cost.

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