KUALA LUMPUR, May 8 (Bernama) -- RHB Investment Bank Bhd (RHB IB) has reiterated its “Buy” recommendation for SD Guthrie Bhd, with expectations of improved output in the coming quarters, as the the plantation company enters the peak output season in the second half of 2025 (2H 2025).
In a note today, RHB IB cited new earnings drivers from land monetisation and its renewables segment.
“The target price is set at RM5.65, reflecting a 21 per cent upside and a 3.0 per cent yield. However, we anticipate a quarter-on-quarter dip in earnings in 2Q 2025, which aligns with the moderation in crude palm oil (CPO) prices.
“Earnings remain largely unchanged after factoring in slightly lower downstream margins and updated annual report 2024 numbers, including revised foreign exchange assumptions,” it added.
Meanwhile, Public Investment Bank Bhd (PIVB) maintains a neutral stance on SD Guthrie. It adjusted its target price to RM4.89 based on a 2026 earnings per share (EPS) projection.
“Despite a strong start, PIVB expects weaker performance in the upcoming quarters, driven by recent significant decline in CPO prices,” it said.
PIVB said SD Guthrie is projecting mid-to-single-digit fresh fruit bunches production growth for 2025, bolstered by recovery in Indonesia and Papua New Guinea.
“CPO production costs are expected to decrease to RM2,500/metric tonne (mt) from RM3,000 in 2024. Around 12 per cent of CPO production in Peninsular Malaysia is secured at RM4,200/mt, while PNG has a rolling three-month forward sales arrangement.
“On the fertiliser application, Indonesia and Papua New Guinea are on track while Malaysian plantation is behind schedule due to the wet period,” it said.
PIVB said the downstream segment is forecast to see a significant improvement in the next quarter, aided by lower raw material costs.
“Additionally, the company is targeting a RM500 million gain from land sales, including a transaction involving Eco Business Park VII in Negeri Sembilan,” it added.
-- BERNAMA
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