PublicInvest sticks with 'Neutral' call on plantation sector after Sarawak visits
New Straits Times (30/12/2025) - KUALA LUMPUR: Public Investment Bank Bhd (PublicInvest) has kept its "Neutral" call on the plantation sector following recent site visits to Sarawak Plantation Bhd and Sarawak Oil Palms Bhd in Miri, Sarawak.
PublicInvest said both companies are early pioneers of Sarawak's oil palm industry and together account for about seven per cent of the state's total planted area.
"A key takeaway from the visit is the strategic landbank exposure along the Pan-Borneo Highway, which presents medium to long-term monetisation optionality," it said in a note.
Srawak Oil Palms has about 5,000 hectares of land at its Taniku estate, while Sarawak Plantation owns about 12,000 hectares across its Subis and Ladang 3 estates along the highway.
PublicInvest noted that the leasehold land currently sit on Sarawak Oil Palm's balance sheet at an undemanding valuation of 23 sen per square feet (psf) while Sarawak Plantation's leasehold lands in Subis and Ladang 3 are only at 10 sen psf and 12 sen psf respectively.
"We see huge potential value in those landbanks once the entire Pan Borneo Highway is fully completed and most sections are fully open to traffic.
"Upsides could be further enhanced if the Trans-Borneo Railway project materialises," it said.
From its visit, PublicInvest highlighted Sarawak Oil Palms' long-term replanting target of between 4,000 and 5,000 hectares per annum.
In terms of production, the company expects its fresh fruit bunch (FFB) output to decline by about 10 per cent in the financial year ending 2025 (FY25), before returning to low single-digit growth in FY26.
"It has approximately 5,000 acres located along the Pan Borneo Highway, which is slated for asset monetisation in the future. It has a 10,000 hectare plantable area that is catered for mixed crop planting.
"The company has earlier ventured into high-value downstream products via collaboration with Avant Health," it said.
Meanwhile, on its visit to Sarawak Plantation, PublicInvest said the company is set to expand its oil palm seed production capacity by 61 per cent to 2.57 million seeds per annum by 2026, before reaching 4.4 million seeds per annum by 2030.
The visit also highlighted the use of insect pollinators to transfer pollen from male to female flowers, a practice that could help improve fruit formation and boost yields.
In addition, PublicInvest said one of the most notable observations was the performance of Sarawak Plantation's new harvesting machine Lipan, which features a three-in-one function covering harvesting, loading, evacuation and dumping.
"It could harvest more than three tonnes/day (land coverage: five hectare/day)," it added.