Sarawak Plantation Bhd - 1QFY26 Miss Offset by Brighter CPO Outlook
Thu, 21-May-2026 07:35 am
by Research Team • Apex Research

Counter

SWKPLNT (5135)

Target Price (RM)

3.89

Recommendation

Buy

  • Missing expectations, SPLB reported FY26 CNP of RM 15.69m, accounting for 14.9%/15.5% of ours and consensus forecasts respectively.

  • 1QFY26 YoY and QoQ CNP miss due to lower external FFB purchases.

  • 1QFY26 FFB and PK production rose YoY while CPO production declined.

  • However, we revise our earnings higher by 4%/9% for FY26/27 on higher CPO price assumptions, better inhouse FFB production, and normalizing external FFB purchases.

  • We upgrade to BUY on SPLB with a TP of RM3.89 based on a PE of 10.1x FY27 EPS 38.6 sen.

 

Results missed expectations. The Group reported 1QFY26 CNP of RM15.69m, which was below expectations, meeting 14.9% and 15.5% of our and consensus full-year estimates respectively. CNP was derived after excluding the following items:

  • Property, plant and equipment written off: RM0.175m

  • Fair value gain in biological assets: -RM7.574m

 

 YoY. For 1QFY26, CNP fell 20% YoY to RM15.69m due to lower revenue contribution. Revenue fell 22% to RM105.2m due to lower CPO production and sales volume coupled with lower ASPs for CPO/PK. Margins expanded with EBITDA/PBT margins rising to 39%/31% vs 30%/23% in 1QFY25.

 

QoQ. CNP fell 48% from RM30.2m due to lower revenue contributions. Revenue fell 36% from RM165.4m primarily due to lower sales volume arising from 1) lower FFB production as the peak production season ended and 2) lower external FFB purchases as suppliers underwent replanting efforts. EBITDA/PBT margins rose to 39%/31% vs 28%/23% in 4QFY25.

 

Operational Highlights. For 1QFY26, FFB and PK production rose YoY while CPO production declined. CPO sales volume declined while PK sales volumes increased. FFB sales volumes were largely unchanged. 

The decline in CPO sales volume was primarily due to lower external FFB purchases. The Group reported that major suppliers were undergoing replanting efforts which reduced FFB yields. Furthermore, the Group maintained stringent purchasing criteria to emphasize on FFB crop quality for the improvement of milling profit margins. 

 

Dividend. A single tier dividend of 5 sen was declared with an ex-date of 12th June 2026.

 

Outlook. Owing to higher expected CPO prices and improving seasonal FFB production, we are optimistic on the Group’s performance for the remainder of the year. We believe that external FFB purchases will normalize as the Group is already in talks with new potential FFB suppliers and are expecting that new supplies are likely to be obtained. This should be supported by recovering industry yields as the year progresses into a more favourable production season. On the other hand, only c.60% of fertiliser supply for FY26 has been secured at pre-war prices. However, we believe that higher ASPs will offset increases in costs.

 

Earnings Revision. We revise our CPO price assumptions higher to RM 4,400 from RM 4,200. In addition, we raise our in-house FFB production assumptions slightly to account for better-than-expected YTD numbers. Consequently, we revise earnings higher by 4%/9% for FY26/27. Our forecasts also take into account a possible increase in fertiliser prices as we move into FY27.

 

Valuation. We upgrade our call on SPLB to BUY with a higher TP of RM3.89, previously RM3.81, based on a PE of 10.1x on FY27 EPS of 38.6 sen. 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 threatening local CPO demand, labour shortages and rising operational costs.

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 3.953306 3.984027
EUR 4.594538 4.602818
CNY 0.582675 0.583138
HKD 0.504615 0.508560
SGD 3.085501 3.109763