The Edge Malaysia (25/12/2025) - This article first appeared in The Edge Malaysia Weekly on December 15, 2025 - December 21, 2025

SD Guthrie Bhd’s (KL:SDG) foray into industrial parks and renewable energy is well liked by analysts. The potential earnings boost from the new ventures has acted as a rerating catalyst for the counter, drawing more investors to the bullish side.

A check on Bloomberg shows that 14 of the 19 analysts covering the group have a “buy” recommendation on the stock, with an average target price of RM5.90. It is a marked increase from the six “buy” calls before the group’s announcement in May 2024.

The potential bump in earnings from land sales linked to SD Guthrie’s industrial park plans, strong crude palm oil (CPO) prices and ESG stance make up the “triple tailwind” supporting the company, CIMB Securities wrote in a note last month.

“It is targeting the upper end of its RM500 million to RM700 million land sale gain forecast for 2026 and expects production costs to be stable year on year in 2026. This, coupled with firm prices, is supportive of its FY2026 earnings,” says the research house.

Investors seem to concur with the bullish stance. Since the industrial park and renewable energy move, the plantation giant’s share price has risen more than 21.9% to RM5.39. This means the shares are trading at a forward price-earnings ratio (PER) of 17.67 times, which is at the low end of its local peers’ 16 to 20 times.

Nevertheless, all ventures come with risk. It all boils down to whether its plans can be realised.

In its financial statements for the quarter ended Sept 30, 2025, SD Guthrie’s nascent industrial park segment logged its maiden contribution of a RM435 million gain from the disposal of land to Eco World Business Park 7 Sdn Bhd, its joint venture (JV) with Eco World Development Group Bhd (KL:ECOWLD) and the Negeri Sembilan government-owned NS Corporation.

The successful sale within the deal’s stipulated timeline has bolstered analysts’ confidence in SD Guthrie’s ability to realise its industrial park and renewable energy aspirations.

“As such, we reckon that the gains on the disposal of land will be sustainable,” AmInvestment Research said in a note last month. It assumes a disposal gain of RM500 million in both FY2026 and FY2027 for SD Guthrie.

A second land deal was entered into with EcoWorld in November, this time joined by the Johor government’s Permodalan Darul Ta’zim Sdn Bhd. SD Guthrie is to sell 941.82 acres in Kulai, Johor, for RM814.78 million to JV Eco Business Park 8 Sdn Bhd, in which it holds a 45% stake.

“We laud the move as it not only helps unlock the value of the existing plantation asset but also generates more recurring income,” PublicInvest Research said in a note last month.

As SD Guthrie has a policy of paying out half of its consolidated recurring profit as dividends, shareholders stand to benefit from higher dividends, CIMB Securities said in its Nov 20 report. Analysts Ivy Ng Lee Fang and Lim Yue Jia expect the plantation giant to declare a dividend per share of 20.5 sen for FY2025, which translates into a yield of 3.80% based on its closing share price of RM5.39 last Friday.

Not everyone is as bullish on SD Guthrie’s prospects, though.

Kenanga Research’s Khoo Teng Chuan, one of four analysts who have a “hold” or “market perform” recommendation on the stock, says the recent share price gain had already captured “a lot of the good news”. He tells The Edge that he welcomes the group’s efforts to create value for its shareholders, but expects the shares to trade lower to his target price of RM5.10.

“Upstream should continue to fare well on firm palm oil prices. Downstream is facing intense competition and can be volatile,” he says.

Looking at the federal government’s slated rollout of a multi-tier levy system, Khoo expects the agricultural sector to be exempted because of food security and inflation concerns. “Also, [the agricultural sector] has no other option, meaning players are not using manual labour because it is cheaper but because some functions cannot be mechanised,” he says.

Another potential downside risk lies in SD Guthrie’s 4,200ha of planted oil palm estates in Indonesia that may be affected by the country’s estate nationalisation agenda.

CIMB Securities said in its report that, in a worst-case scenario where the 4,200ha at risk is written off, it sees the plantation giant taking a hit of RM72 million, or 3.7% of its FY2025 core profit forecast. “However, the negative impact could be partially offset by gains from future land disposals in Malaysia,” it added. 

Read more at https://theedgemalaysia.com/node/786142