IOI Corp's FFB growth target maintained at 2.5pct for FY2025
According to the bank, FFB production has rebounded both month-on-month and year-on-year since March 2025, supported by favourable weather conditions.
"The output recovery has helped to narrow the group's year-to-date (YTD) FFB output decline to just 0.3 per cent for the first ten months of FY25.
"Management indicated that the recovery trend is likely to continue in the coming months, potentially allowing IOI Corp to exceed its initial FY25 FFB output growth guidance of one to two per cent.
"As such, we maintain our FY25 FFB output growth assumption of 2.5 per cent," it said in a note.
Meanwhile, HLIB Research noted that several factors, including lower FFB output, the minimum wage hike effective February 2025, and a higher windfall profit levy, contributed to a 1.3 per cent YoY increase in IOI Corp's crude palm oil (CPO) production cost for the third quarter of FY25 (3Q25), raising it to RM2,530 per metric tonne.
This brought the average CPO production cost for the first nine months of FY25 to RM2,104 per metric tonne, representing a 1.5 per cent decline compared to the same period last year.
Given the anticipated strong FFB output in 4Q25, the firm said management remains confident in keeping the full-year CPO production cost below RM2,100 per metric tonne.
Furthermore, HLIB Research said IOI Corp's decent performance in the manufacturing segment is expected to be sustained into 4Q25, if not improved further.
It added that earnings at the manufacturing segment improved QoQ in 3Q25, with a profit of RM81.4 million, primarily driven by margin expansion at the refinery sub-segment, which more than mitigated weakness at the oleochemical and speciality fats sub-segments.
"Management shared that earnings at the manufacturing segment should at least track 3Q25's performance (if not better), supported by sustained performance at the refining sub-segment arising from stable margins and improving availability of feedstock.
"This includes gradual demand recovery for oleochemical products, albeit input prices remained elevated, as well as an improving contribution from the speciality fats sub-segment (as production normalised from the loss of production)," it said.
On that note, HLIB Research also highlighted that IOI Corp's accelerated replanting programme, covering 8,000 to 9,000 hectares per annum since FY19, will continue into FY26.
This is expected to reduce the group's average age profile to approximately 13 years by the end of FY26.
The firm also noted that construction of the zero-waste paper pulp plant, undertaken through Nextgreen IOI Pulp Sdn Bhd (NIP), a 45 per cent owned joint venture unit of IOI Corp, is scheduled to begin in the first half of 2026 (1H26), with completion targeted by the end of 2027.
Upon completion, it said the facility will have an initial annual production capacity of 150,000 metric tonnes of chemical bleached pulp.
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