Johor Plantations Group Berhad - From Plantation Core to Integrated Palm Oil Player
Fri, 18-Sep-2026 12:47 pm
by Ong Yong Jen • Apex Research

Counter

JPG (5323)

Target Price (RM)

2.23

Recommendation

Buy

  • JPG operates an increasingly integrated palm oil value chain encompassing the following business segments: (i) Upstream & Midstream, and ii) Trading & Services. Upstream and Midstream remains the Group’s core business, contributing RM1.3bn and RM457.0m respectively or c.99% of FY25 revenue.

  • The commencement and ramp-up of JPG's Integrated Sustainable Palm Oil Complex (iSPOC), scheduled for commissioning in 2HFY26, poses a potential medium-term catalyst. Part of the complex includes a specialty fats and oils refinery which represents the Group’s foray into Downstream, enabling the sale of premium products. 

  • El Niño supply risks could support higher CPO prices as downward revisions to Malaysian and Indonesian production expectations occur, potentially extending the current high-CPO-price environment into FY27. 

  • Initiate coverage on JPG with a BUY and a target price of RM2.23 (+20.6%). Our target price is derived by applying the sector peer average PE multiple of 15.1x to our FY27F EPS of 14.7. 

 

Key Investment Highlights

El Niño Supply Risks Could Sustain Higher CPO Prices. At present, NOAA currently sees a greater than 90% probability of a very strong El Niño during the Northern Hemisphere autumn and winter of 2026/27. The developing El Niño represents a potential catalyst for CPO prices as prolonged hot and dry conditions can reduce palm productivity with a lag. 

 

A tightening supply outlook should support CPO prices and benefit JPG given the Group's predominantly upstream earnings exposure. Higher realised CPO prices should translate into disproportionately stronger margins as a significant portion of plantation costs does not increase proportionately with selling prices. The key catalyst would be downward revisions to Malaysian and Indonesian production expectations as El Niño develops, potentially extending the current high-CPO-price environment into FY27.

 

iSPOC to Unlock a New Downstream Earnings Growth Leg. JPG’s downstream strategy is anchored by the Integrated Sustainable Palm Oil Complex (iSPOC) in Sedili, Johor. This development marks the Group’s transition beyond bulk CPO and PK production towards higher-value palm-based products, providing a meaningful earnings ramp-up as volumes scale. Looking ahead, we believe that a successful commissioning and utilisation ramp-up could meaningfully lift earnings from FY27 and potentially support a higher valuation multiple as the earnings mix shifts toward value-added downstream products.

 

Valuation & Recommendation. We initiate coverage on JPG with a BUY recommendation and a target price of RM2.23, derived by applying the sector peer average FY27 forward PE multiple of 15.1x to our FY27F core EPS of 14.7 sen, and supported by a three-star ESG rating. 

 

Risk. i) CPO and palm kernel price risk, ii) Cost inflation and margin compression, iii) Execution risk on the integrated/downstream growth strategy, iv) Weather, biological and plantation-yield risk.

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