Palm Oil Players Expected To Show Weaker 1Q Earnings Despite Elevated CPO Prices
12/05/2026 (Business Today) - RHB Investment Bank Bhd (RHB Research) and CIMB Investment Bank Bhd (CIMB Securities) both maintained a NEUTRAL stance on the plantation sector.
The analysts at these houses noted that 1Q26 earnings are expected to weaken quarter-on-quarter and year-on-year despite supportive crude palm oil (CPO) price dynamics and improving demand trends ahead of Indonesia’s B50 biodiesel rollout.
RHB Research said plantation earnings across Malaysia and Indonesia-centric players are likely to moderate in 1Q26F due to weaker seasonal output and softer upstream pricing, although it expects a recovery in 2Q26 on stronger production and firmer prices.
The research house highlighted that palm oil stocks in Malaysia rose 1.7% month-on-month to 2.31 million tonnes in April 2026, though it expects inventories to stabilise as buyers position ahead of Indonesia’s B50 implementation in July.
It added that downstream margins are expected to diverge between regions, with Indonesian players likely to face pressure from a narrower upstream-to-downstream tax differential of US$74 per tonne, down 12% quarter-on-quarter, while Malaysian downstream operators could see margin support from reduced Indonesian competition.
RHB Research said earnings from most remaining plantation companies are expected to be largely in line with expectations, although TSH Resources could underperform due to weaker fresh fruit bunch output trends. It also maintained a tactically positive trading view on the sector, citing potential inventory support from stronger export demand ahead of biodiesel policy changes.
CIMB Securities, meanwhile, said palm oil stocks are expected to rise further to 2.34 million tonnes in May 2026, while CPO prices are likely to remain elevated due to geopolitical risks from the US–Iran conflict, higher biodiesel mandates and El Niño-related supply concerns.
The research house noted that Malaysia’s April stock level of 2.31 million tonnes was above expectations, driven by a 18.4% month-on-month jump in production to 1.63 million tonnes. However, exports fell 14.3% month-on-month due to earlier front-loading and weaker competitiveness against soybean oil.
CIMB maintained Neutral on the sector, citing valuation support but balancing risks from supply fluctuations and weather uncertainty. It highlighted IOI Corporation Bhd as its top pick, alongside Hold calls on Kuala Lumpur Kepong Bhd and SD Guthrie Bhd.
Both research houses expect CPO prices to remain supported by global energy market volatility and policy-driven biodiesel demand, even as near-term earnings visibility remains muted.