Minimal tariff impact expected on SD Guthrie
The research house is also positive on the planter's European Union Deforestation Regulation (EUDR) readiness after it had reaffirmed its commitment to compliance through the implementation of the company's 'beyond zero' strategy.
'SD Guthrie shared that the United States palm imports over the years have been somewhat consistent despite the high price volatility.
'Most of the imports are refined oils and used as ingredients (not bulk oil), making substitution less likely,' it explained.
The research house said SD Guthrie anticipated the 19% tariffs will have minimal impact on US palm oil imports, as the United States is not a price-sensitive market such as India, Pakistan and Bangladesh.
'Furthermore, revenue from the United States has consistently been categorised as minimal. Based on our channel checks, the group's revenue exposure to the United States remains insignificant,' it added.
MBSB Research shared that Malaysia has consistently retained its position as the top contributor, recording a compound annual growth rate of about 10%.
It said India surged to second place by 2024, supported by population-driven demand and rising refined oil imports.
Meanwhile, Europe exhibited volatility – largely attributable to regulatory changes such as the EUDR and targeted import restrictions.
The research house highlighted that other emerging markets, including Papua New Guinea, South Africa and Pakistan, continued to deliver steady but modest growth.
On the EUDR preparation, MBSB Research said SDG explained that the EUDR will be enforced from Jan 1, 2026, requiring 100% traceability to plantations, deforestation-free status post-2020, and full compliance with local laws.
This includes global positioning system mapping and proof of no deforestation while non-traceable or mixed oils will be barred from European Union entry.
'The company acknowledges the challenges, especially around oil mixing and smallholder sourcing, and is actively engaging in ongoing discussions with regulators to address data transparency and risk classification.
'Nonetheless, the first EUDR-compliant shipment has taken place, around 40,250 tonnes, covering more than 100,000ha and over 17,000 smallholders,' it said.
MBSB Research said premium for EUDR-compliant oil can reach US$300 to US$400 per tonne, but there is still no commitment from regular buyers.
Overall, the research house remained optimistic with SD Guthrie's upstream sub-segment due to expected recovery in its fresh fruit bunch yield following the intensive rehabilitation efforts undertaken last year in Malaysia.
It has maintained a 'buy' call on the counter with an unchanged target price of RM5.43 based on the financial year 2025 earnings per share of 24.7 sen.
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