Kenanga, RHB Stay Neutral On Plantations As CPO Outlook Moderates
KUALA LUMPUR, Sept 11 (Bernama) -- Kenanga Investment Bank Bhd has maintained a 'neutral' call on the plantation sector, saying earnings are expected to stay robust into calendar year 2026 (CY26) but lacking strong upside catalysts.
"Our 'neutral' weight for the sector is left intact. Our picks are now Kuala Lumpur Kepong (KLK) with an 'outperform' (OP) rating and a target price (TP) of RM23.00, Hap Seng Plantations Holdings (OP; TP: RM2.40) and PPB Group (OP; TP: RM10.50)," the bank said in a research note.
Kenanga said third-quarter CY25 plantation earnings should remain firm, but fourth-quarter CY25 and CY26 earnings could ease due to stronger year-earlier comparatives.
It raised its crude palm oil (CPO) price forecast for CY25 to RM4,300 per tonne, from RM4,200, on the back of resilient year-to-date prices. Its CY26 estimate was unchanged at RM4,000 per tonne.
RHB Investment Bank Bhd also kept a 'neutral' stance on the sector, noting that CPO prices are likely to moderate as output peaks, though festive demand should provide support.
Malaysia’s palm oil inventory rose four per cent in August 2025 to 2.2 million tonnes, lifting the stock-to-usage ratio above its historical average.
"We expect stock levels to stay above two million tonnes in the near term, given peak output," it said.
The bank's top picks include value plays Johor Plantations Group, IOI Corp, Sarawak Oil Palms, and PT Perusahaan Perkebunan London Sumatra Indonesia Tbk, as well as situational plays such as SD Guthrie and First Resources Ltd.
-- BERNAMA