After strong start, SD Guthrie's earnings growth could moderate as palm oil price softens, analysts flag
08/05/2025 (The Edge Malaysia), Kuala Lumpur - Despite a strong start to 2025, SD Guthrie Bhd’s (KL:SDG) earnings growth could moderate in the coming quarters, analysts said, flagging softer palm oil prices and downstream demand pressure.
Investors, however, cheered the first-quarter results that accounted for one-third of the consensus full-year forecast. SD Guthrie rose as much as 11 sen or 2.4% to RM4.67, helping the stock to beat poor broader market conditions.
The upstream segment is expected to see output growth recovery, partially cushioning the downtrend in palm oil prices, said BIMB Securities. SD Guthrie’s downstream segment, however, “remains challenging, given the intense competition and uncertainties in demand from global trade tensions”.
Crude palm oil (CPO) prices have declined about 16% so far this year amid worries over weak demand at a time of rising output. Prices of soybean oil, its main edible oil substitute, are also staying firm due to supply tightness and help palm oil to stay competitive.
The consensus is cautious with 10 ‘hold’ ratings, seven ‘buy’ recommendations and one ‘sell’ call, according to Bloomberg. The average 12-month target price is RM5.08, implying a potential gain of up to 11% from current prices.
The recent rebound in SD Guthrie’s share price, meanwhile, has cut the year-to-date loss to about 7% as investors are still nursing losses from the sharp selldown during the April tariff turmoil.
CIMB Securities is worried that recent US reciprocal tariffs could affect demand for processed palm oil and delay SD Guthrie’s land monetisation plans, on top of lower CPO prices in the second and third quarters of the year.
The research house downgraded the stock to ‘hold’ from ‘buy’ and cut its target price to RM5.06, citing a lack of near-term catalysts as well as risks of slower global growth affecting downstream segment valuations and slower land monetisation.