Latest news with #HapSengPlantationsHoldingsBhd
The Star
02-07-2025
- Business
- The Star
Plantations hold steady, await catalyst
PETALING JAYA: Analysts are mostly neutral on the plantation sector, projecting the crude palm oil (CPO) prices to trade between RM3,800 and RM4,200 per tonne in the second half of this year (2H25). According to Kenanga Research, palm oil prices are expected to stay firm through a good 2025 season, underpinned by a global edible oil supply deficit this year, which may persist into 2026. Cost pressures should also stay manageable, thanks to firm selling prices, the research house said in a note to clients yesterday. While valuations appear to have bottomed out and are not excessive, Kenanga Research noted that 'there is no strong upside catalyst either.' It pointed out that edible oil demand remains visible and resilient, with a trend-line growth of 3% to 4% yearly. Meanwhile, supply is expected to grow by only 2% to 3% over 2025 to 2026. As a result, edible oil prices, including palm oil, will likely stay sufficiently firm. Many pure upstream players have also turned net cash, including Hap Seng Plantations Holdings Bhd , Ta Ann Holdings Bhd , TSH Resources Bhd and United Malacca Bhd . 'Hence, decent to good dividend payouts can be expected, unless they embark on merger and acquisition (M&A) activities,' it added. The research house expects non-integrated planters to increasingly become dividend-yield plays. 'For larger integrated players, we expect more M&A or diversification into non-plantation businesses – hence, (they are) likely to stay net borrowers. 'Even so, as the balance sheets of integrated players such as IOI Corp Bhd , Kuala Lumpur Kepong Bhd and SD Guthrie Bhd are backed by valuable landbank, their current gearing levels should not be a key concern to investors,' Kenanga Research pointed out. It added that firm CPO and strong palm kernel selling prices are expected to help absorb most of the cost upticks in 2025. As a result, upstream margins are expected to stay healthy. Altogether, 2025 margins should stay robust, thanks to upstream operations. Kenanga Research named IOI, with a target price of RM4.10 per share, as its big-cap pick, citing its sector-leading return on equity and declining gearing, which provides greater headroom for M&A. Among pure upstream players, Hap Seng Plantations, with a target price of RM2.40, still offers good, defensive upstream exposure, supported by over RM500mil in net cash. For the longer term, United Malacca – with a target price of RM6 – should see rising profits from newly maturing estates, while TSH – with a target price of RM1.30 – is expanding its planted area by 25% to 30% over the next three to five years. Genting Plantations Bhd with a target price of RM5.70, should also see a stronger 2Q25 contribution from its newly opened Jakarta Premium Outlet. Meanwhile, CGS International Research (CGSI Research) has lifted its CPO price forecast to RM4,200 per tonne for 2025. In a report, the research house noted that upstream players stand to benefit the most from high CPO prices. 'Our earnings sensitivity analysis shows that Genting Plantations, SD Guthrie and Hap Seng Plantations deliver the strongest earnings uplift with every 5% rise in CPO price,' it noted. With the current CPO rally starting early June 2025 driven by macro and policy shocks, CGSI Research expects upstream-focused names to benefit more significantly. 'After factoring in our revised CPO price assumption, accounting for forward commitments and softer palm kernel prices, our earnings revisions suggest Hap Seng Plantations, SD Guthrie and Ta Ann are the biggest beneficiaries from higher CPO prices under our coverage,' the research house highlighted. CGSI Research also recommended investors seeking defensive plays to accumulate agribusiness companies with high dividend yields, such as Hap Seng Plantations and Ta Ann, citing more stable earnings compared to other sectors.
The Star
03-06-2025
- Business
- The Star
Lower crude palm oil prices a drawback for Hap Seng Plantations
PETALING JAYA: Hap Seng Plantations Holdings Bhd's second half of financial year 2025 (2H25) earnings may come under pressure due to lower crude palm oil (CPO) prices. CGS International (CGSI) Research said it expects a weaker 2H25 due to lower CPO pricing, adding that CPO prices were down 21% since April to date. 'We expect 2H25 forecast earnings to be lower half-on-half, mainly due to lower CPO pricing, though this may be partially offset by higher sales volume and lower cost of production. 'Having said that, we believe the company's 2H25 earnings may be stronger than its peers, mainly on the back of its higher-than-peers CPO average selling price (ASP) which is usually 10% to 15% higher than peers, thanks to its sustainability and food grade-related certification as well as better cost efficiency 'We reiterate our 'add' call, with an unchanged target price of RM2.25. 'Downside risks include worse-than-expected fresh fruit bunch (FFB) yields (due to heavy rainfall in Sabah) and lower-than-expected sales volume. 'Potential re-rating catalysts are higher-than-expected FFB and CPO output, and higher-than-expected dividend payout,' CGSI noted. Hap Seng Plantations' 1Q25 core net profit came in at RM39mil, contributing 28% of CGSI Research and 24% of Bloomberg consensus full-year forecasts. UOB Kay Hian Research expects the ASP of CPO at RM4,200 per tonne versus previous assumptions of RM4,500, along with a production growth of 9% year-on-year.
