• HAPL’s 6MFY26 CNP recorded at RM68.5m (+14.2% YoY), representing 40% and 41% of our and consensus forecasts, respectively. While CNP fell below the typical 50% benchmark, we deem these results as inline owing to lower seasonal volumes in 1HFY26 and expectations of stronger CPO prices and volumes sold in 2HFY26.
• YoY CNP supported by higher ASPs and volumes sold. Post exclusion of EIs, softer QoQ CNP driven by higher operating expenses outweighing higher ASPs.
• YTD production positive with FFB, CPO, and PK production rising 6.8%, 7.8%, 9.3% YoY respectively. CPO (+8.7% YoY, +9.0% QoQ) and PK (+7.3% YoY, +8.3% QoQ) prices rise.
• Higher CPO prices and improved FFB production should support 2HFY26 topline growth, while FY27 earnings will likely reflect stronger CPO pricing offset by an estimated 7% decline in FFB yields in 1HFY27 due to El Niño.
• Re-iterate our BUY recommendation with a target price of RM3.31, based on 12.5x P/E multiple pegged to FY27F EPS.
Results inline with expectations. 6MFY26 CNP arrived at RM68.5m, representing 40% and 41% of our and consensus estimates respectively. 2QFY26 CNP was derived after excluding the following non-core items:
- Gain on FV of money market deposits: -RM4.2m
- Net change in FV adjustments of biological assets: -RM1.06m
- PPE Written off: RM0.05m
- Net gain on disposal of PPE: -RM0.05m
- Dividend income from money market deposits: -RM0.54m
While 6MFY26 CNP came in below the typical 50% benchmark, we deem the results in line, given the seasonally lower production volumes among plantation companies in 1HCY26 and expectations of higher seasonal volumes as the year progresses in addition to stronger CPO prices.
YoY. For 2QFY26, CNP rose 32.7% YoY to RM33.51m. This was primarily driven by stronger revenue contributions owing to higher CPO and PK ASPs as well as CPO sales volumes. The increase in ASPs for topline performance was partially mitigated by higher unit production costs with CNP margins only marginally rising to 16.6% (2QFY25: 16.2%).
QoQ. Post reversal of EIs, 2QFY26 CNP marginally fell 4.2% from RM35m while CNP margin fell to 16.6% from 18.2%. This is attributed to higher operating expenses and lower CPO sales volume which was partially offset by revenues rising to RM201.7m (+4.8%) on higher average ASPs.
Operational Highlights. YTD production remains positive with FFB, CPO, and PK production rising YoY. CPO and PK ASPs had risen both YoY and QoQ. Sales volumes for CPO and PK had decline 3.1% and 9% respectively. On a YoY basis, CPO volumes rose 22.8% while PK was marginally changed at +0.6%.
Outlook. Moving into 2HFY26, higher expected CPO prices and YoY improvements in FFB production should anchor topline performance. As for FY27, with El-Nino on the horizon, we expect topline performance to be impacted by higher CPO prices and lower FFB yields in 1HFY27. As mentioned in our sector report, our expectations are for moderate-strong El Nino conditions to induce lower monthly FFB yields with HAPL’s yields to be impacted by 7% for 1HFY27. We also raised our average input CPO prices to RM4,500 for FY26 and RM4,800/RM4,600 in 1H/2HFY27. Altogether, we believe that HAPL earnings should continue to be supported by higher CPO ASPs moving into 2HFY26 and similarly in FY27.
Earnings forecast. Following our sector report, we maintain our FY26/27 earnings forecast of RM185.6m/RM212m respectively.
Valuation. We recommend a BUY on Hap Seng Plantations with a target price of RM3.31, by pegging 12.5x P/E multiple to FY27F EPS and 0% ESG factored premium/discount based on threestar ESG rating.
Risk. 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
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| Currency | Buy Rates (RM) | Sell Rates (RM) |
|---|---|---|
| USD | 4.009122 | 4.041218 |
| EUR | 4.693152 | 4.697974 |
| CNY | 0.598662 | 0.599280 |
| HKD | 0.511644 | 0.515244 |
| SGD | 3.158149 | 3.180401 |