Sarawak Plantation Bhd - Higher FFB production set for FY26
Thu, 26-Feb-2026 09:11 am
by Team Coverage • Apex Research

Counter

SWKPLNT (5135)

Target Price (RM)

3.76

Recommendation

Hold

  • Overshooting expectations, SPLB reported FY25 CNP of RM 90.7m (+22.4% yoy), accounting for 116.6%/112.3% of ours and consensus forecasts respectively.

  • FY25 FFB production rises 6.91% yoy to 360,933 tonnes. 

  • We retain our HOLD call on SPLB with a TP of RM3.76 based on an implied PE of 10x FY26 EPS.

 

Results exceeded expectations. The Group reported FY25 CNP of RM90.7m, which was above expectations, meeting 116.6% and 112.3% of our and consensus full-year estimates. The variance had resulted from a higher-than-expected ASP for CPO in FY25.

 

YoY. For 4QFY25, revenue stood at RM165.4m (+15.2%) supported by higher sales volume of 26.2% and 33.9% of CPO and PK products respectively. Lower CPO prices (-10.0%) had hindered top line and were slightly offset by higher PK prices (+2.1%). Increases were seen in GP for both Plantation and Milling segments at 4.4% and 72% respectively. Cumulatively, FY25 revenue rose to RM 571.6m (+3.7%), being aided by increases in the ASP of CPO (3.9%) and PK (31.7%). This was offset by lower sales volumes of 4.5% and 3.8% for CPO and PK respectively. CNP stood at RM24.2m and had risen 35.6%.

 

QoQ. Revenue had risen 18.4% supported by higher FFB production, thanks to seasonal peak production trends in 2HFY25 (+27.8% vs 1HFY25). Meanwhile, CNP had risen 24.5%.

 

Outlook. Management has guided for ambitious double-digit growth (~20%) in FY26 FFB production, targeting ~430k tonnes from ~360k tonnes in FY25. We remain cautious on the achievability of this target, given historical YoY production growth of below 10% and the group’s record of downward revisions to output targets in FY25. While lower replanting of 1,000 ha in FY26 (vs c.3,200 ha in FY25) and higher fertiliser application could support production growth, we adopt a more conservative FY26 FFB growth assumption of 5.1% with yields of 18 tonnes/ha (FY25: 17.93 tonnes/ha). Overall, our conservative assumptions imply limited upside to current market expectations, supporting our HOLD recommendation given uncertainty in production growth. We note that while a BUY is implied from the total upside, recent price appreciation and future uncertainties remain that underpin our HOLD recommendation.

 

Earnings Revision. We note a revision in our earnings estimates following a change in analyst. From the previous forecast, our FY26F and FY27F earnings have been revised upwards by 27.9% and 13.7% respectively. We also set a forecasted CPO price of RM4,200/MT for FY26.

 

Valuation. We reiterate our HOLD call on SPLB with a higher TP of RM3.76 based on an implied PE of 10x FY26 EPS of 37.6. We ascribe a 0% ESG adjustment, in line with the Group’s three-star ESG rating.

 

Risk 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.

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