IOI Corp upstream earnings strong amid CPO gains, says RHB
IOI achieved fresh fruit bunch (FFB) growth in the financial year 2025 (FY25) of 1.3 per cent year on year (YoY), below its original target of 3 per cent.
While output saw a mini-peak in April, IOI expects production to pick up again in July, with a bigger peak in August-September.
"For FY26, it expects FFB output growth of 3-5 per cent from better weather conditions. This is in line with our 4 per cent forecast," RHB Research said in a note.
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Meanwhile, the firm noted that IOI is excited about its 33 per cent stake in a new pulp and paper joint venture using oil palm empty fruit bunches (EFB) with Nextgreen Global (NGGB MK, NR) to produce renewable pulp and paper products in Pekan.
RHB Research noted that the first phase of the plant (150,000 tonnes) should be operational by 2028, with a potential earnings before interest and taxes (EBIT) contribution of about RM30 to RM50 million.
It said IOI has also ventured into the coconut plantation business, planting some 3,500 ha of its peripheral landbank (target 4,600 ha) with coconut trees.
"This is expected to bring in an EBIT of RM60 million to RM70 million based on current coconut prices and full maturity of trees.
"Overall, we keep Buy on the stocks with a target price of RM4.30," it added.
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