14/05/2026 (Business Today Editorial) - CIMB Investment Bank Bhd (CIMB Securities) has initiated coverage on Johor Plantations Group Bhd, assigning a HOLD call and a target price of RM1.91.

The brokerage noted that while other analysts largely maintain Buy recommendations, rising costs, accelerated replanting, and iSPOC start-up expenses could offset potential gains from stronger crude palm oil prices, despite the group’s long-term expansion strategy.

CIMB Research said Johor Plantations Group is a Johor-centric upstream planter with 55,723 hectares of planted oil palm estates, accounting for about 8% of Johor’s total planted area. It said the group’s growth will be driven by accelerated replanting to improve future fresh fruit bunch yields, higher external sourcing of feedstock and downstream expansion via its Integrated Sustainable Palm Oil Complex.

However, it added that near-term earnings visibility remains constrained by cost pressures and investment phases.

The research house said it expects earnings to stay largely flat in FY26 before declining in FY27 as higher crude palm oil prices are offset by rising operating costs, depreciation and interest expenses linked to the RM600 million iSPOC project.

It also noted that accelerated replanting will temporarily weigh on output while commissioning of downstream assets only begins from 3Q26 onwards.

CIMB Securities said it values Johor Plantations Group at 14.5 times forward earnings, in line with sector historical averages, and believes the stock’s 13% year-to-date rally has largely priced in positive expectations.

It added that while RSPO certification and external fruit sourcing agreements support margin stability, earnings growth will depend on successful execution of downstream integration and yield recovery from younger palms.

Despite initiating the call, CIMB Securities highlighted that Johor Plantations Group remains supported by a roughly 4% dividend yield and its position as a pure-play Johor-based crude palm oil producer, though near-term upside is seen as limited given cost headwinds and heavy reinvestment cycles.

As of 11.03 am, the stock price decreased by 2.79% to RM1.74.

https://www.businesstoday.com.my/2026/05/14/cimb-foresees-johor-plantations-fy27-earnings-declining/