Sarawak Plantation earnings seen sensitive to CPO price swings, says PublicInvest
New Straits Times (25/05/2026) - KUALA LUMPUR: Sarawak Plantation Bhd is expected to remain highly sensitive to movements in crude palm oil (CPO) prices, with every RM100 change in CPO prices estimated to affect the group's bottom line by about RM8 million, according to Public Investment Bank Bhd (PublicInvest).
Sarawak Plantation began the first quarter (Q1) of financial year 2026 (FY26) with a core profit of RM15.8 million, attributed to higher production costs, a decline in palm kernel credit and lower CPO sale volume.
PublicInvest noted that this accounted for 15.1 per cent and 16.6 per cent of the firm and the street's full-year expectations, respectively.
"The softer earnings were mainly due to the high base of CPO prices recorded in the Q1 FY25. In view of current CPO price strength and a strong recovery in fresh fruit bunch (FFB) production, we expect a gradual catch-up in the subsequent quarters," it said.
Looking forward, PublicInvest said despite seeing a moderate seven per cent growth in Q1 FY26, Sarawak Plantation retains its strong FFB production growth target of 25 per cent for FY26F, with sharp production growth starting from May.
The firm noted that the fertiliser application has reached 75 per cent of the targeted level in Q1 2026.
"The company has locked in around 60 per cent of its fertiliser requirements at prices prior to the start of the conflict in the Middle East, while the remaining 40 per cent is expected to be procured at a higher price of 30 per cent year on year (YoY).
PublicInvest maintained its "Outperform" recommendation on the stock and raised its target price to RM4.36 after rolling forward valuations to FY27 and making housekeeping adjustments.