• In line with expectations, SPLB reported 6MFY26 CNP of RM46.6m, accounting for 43%/48% of ours and consensus forecasts respectively.
• 2QFY26 CNP rose YoY and QoQ, supported by higher FFB production and CPO sales volumes, alongside higher CPO and PK ASPs. The QoQ improvement was also aided by the seasonal recovery in production.
• 2QFY26 production stronger across the board, with YoY and QoQ increases in FFB, CPO and PK production.
• We revise our earnings higher by 8%/20% for FY26/27 on higher CPO price assumptions while also incorporating yield decreases in 1HFY27 from El-Niño effects.
• We downgrade to HOLD on SPLB with a higher TP of RM4.67 based on a PE of 10.1x FY27 EPS 46.4 sen.
Results in line with expectations. The Group reported 2QFY26 CNP of RM30.9m with 6MFY26 at RM46.6m, meeting 43% and 48% of our and consensus full-year estimates respectively. The 6MFY26 CNP was derived after excluding the following items:
- Fair value gain in biological assets: RM15.6m
- Gain on disposal of property, plant, and equipment: RM0.09m
- Property, plant and equipment written: RM0.2m
While 6MFY26 CNP came in slightly below our typical 45%–55% benchmark, we deem the results in line, given the seasonally lower production volumes among plantation companies in 1HCY26.
YoY. For 2QFY26, CNP rose 73.1% YoY to RM30.9m supported by a 12% YoY increase in revenue to RM147.3m. The increase in revenue was driven by both stronger prices and volume sold in CPO and PK. Margins had expanded with EBITDA/PBT margins rising to 40.9%/35.1% vs 34.6%/28.1% respectively with the expansion being attributable to the YoY increase in CPO and PK ASPs.
QoQ. CNP rose 97% QoQ supported by a 40% QoQ increase in revenue due to a seasonal increase in CPO/PK volumes sold and higher CPO and PK ASPs. In non-seasonal factors, QoQ CNP growth was further amplified by the low 1QFY26 base, when external FFB purchases were constrained. Recall that in Q1, this was due to lower-than-expected FFB purchases arising from replanting efforts undertaken by external FFB suppliers. EBITDA/PBT margins rose to 40.9%/35.1% from 39.4%/30.5% likely supported by QoQ increase in ASPs.
YTD. 6MFY26 CNP rose 28.3% to RM46.6m despite a 5.3% decline in revenue. The decline was mainly attributable to lower CPO sales volumes, coupled with marginally weaker realised CPO and PK ASPs. This was partly offset by an increase in PK sales volumes. The increase in CNP was also supported by a 15.8% decline in YTD operating expenses due to lower FFB purchases in 1QFY26.
Operational Highlights. For 2QFY26, FFB, CPO, and PK production rose YoY and QoQ. In addition, CPO/PK ASPs rose YoY and QoQ. FY26 fertiliser requirements have been fully committed with 70% of supply secured at December 2025 and the remaining 30% secured in early August 2026. Average price increases between the two procurements were c.13%. The management expects fertiliser prices to rise a further 10–20% in 2027 if the Middle East conflict persists. Regarding the sourcing of new FFB suppliers, management has acknowledged that new suppliers were procured albeit at small volumes. For context, 2QFY26 external FFB purchases stood at 50.9k MT vs 2QFY25 at 56.80k MT.
Dividend. A single tier dividend of 7.5 sen was declared with an ex-date of 8th Sept 2026. For FY26, YTD dividend declared stands at 12.5 sen.
Outlook. We expect the Group’s performance to evolve in line with our expectations. External FFB purchases should continue normalizing as industry yields recover seasonally for 2HFY26. Fertiliser prices have risen in line with industry trends and could increase further should the conflict persist. At present, we assume FY27 fertiliser prices to rise 20% YoY which should be offset by increases in ASPs.
Earnings Revision. As mentioned in our sector report, our expectations are for moderate-strong El Nino conditions to affect lower monthly FFB yields for 1HCY27 by 7% and we have assumed that SPLB’s yields will follow suit. We also raised our average CPO prices assumptions in FY26 to RM 4,500 and to RM4,800/RM4,600 in 1H/2HCY27 respectively. Consequently, we raise our core earnings forecast for FY26/27 by +8%/+20%. This is in addition to an assumed 20% increase in fertiliser prices for FY27.
Valuation. Following our sector report, we revised our TP for SPLB higher to RM4.67, previously RM3.89, based on a PE of 10.1x on FY27 EPS of 46.4 sen. We ascribe a 0% ESG adjustment, in line with the Group’s three-star ESG rating. We also downgrade our call to a HOLD due to the recent price rally coming close to our estimated TP, not from any deterioration of company fundamentals. However, we do note that CPO prices have recently reached RM5,000/MT, above the levels embedded in our average price assumptions; sustained prices at this level would present upside risk.
Risk. Key risks include adverse export regulations, weather-related disruptions to FFB production, changes in taxation or Indonesian export policies, labour shortages and higher operating costs.
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| Currency | Buy Rates (RM) | Sell Rates (RM) |
|---|---|---|
| USD | 4.032092 | 4.058429 |
| EUR | 4.727705 | 4.730319 |
| CNY | 0.601817 | 0.602165 |
| HKD | 0.514265 | 0.517647 |
| SGD | 3.175026 | 3.196037 |