SD Guthrie set for stable 2H25 on firm CPO prices
In the second quarter of financial year 2025 (2Q25), the group posted a net profit of RM505mil, translating to a basic earnings per share of 7.30 sen.
This was up from RM415mil, or six sen, in the same quarter a year ago.
The group's revenue increased from RM4.97bil in 2Q24 to RM5.17bil in 2Q25.
Cumulatively, SD Guthrie reported a net profit of RM1.07bil and revenue of RM9.99bil for 1H25, up from RM626mil and RM9.31bil, respectively, in the same period of last year.
RHB Research stated that the group's earnings beat expectations, with core profits accounting for 62% to 70% of its and the street's FY25 forecasts.
'This was from lower-than-expected interest costs, higher-than-expected crude palm oil (CPO) average selling prices (ASPs) in Malaysia and Papua New Guinea, and stronger-than-expected downstream margins,' the research house said in a report.
It maintained a 'buy' call on the stock with a higher target price of RM6.10 per share.
RHB Research also raised its earnings forecasts for SD Guthrie by 21.8%, 15.1% and 15.5% for FY25 to FY27, respectively, citing higher ASP premiums in Papua New Guinea, lower interest rates and higher downstream margins.
Meanwhile, Kenanga Research said the group's 1H25 core earnings amounted to about 63% of its and 59% of consensus full-year estimates.
It noted that in 1H25, core net profit jumped to RM1.02bil.
Looking ahead, the research house expects the group's 2H25 profit to remain healthy.
Meanwhile, Kenanga Research forecasts CPO prices of RM4,100 and RM4,000 per tonne for FY25 and FY26, respectively.
While labour costs are on the rise, healthy palm kernels yields are helping to keep overall costs manageable.
Fresh fruit bunch output is also improving on a yearly basis, while fertiliser costs have declined thanks to a stronger ringgit.
However, the downstream segment is expected to face weak demand and margins in FY25, with a modest recovery projected in FY26 amid subdued global economic growth.
While SD Guthrie has yet to win any projects under the fifth large-scale solar (LSS5) programme, it is expected to continue bidding for future LSS projects and pursue direct supply agreements with buyers.
That said, due to engineering, procurement, construction, and commissioning constraints over the next 12 to 18 months, meaningful solar contributions are only expected to begin in FY28.
As for its industrial property segment, Kenanga Research expects development profits of RM20mil to RM30mil by FY27, with potential to grow to RM100mil to RM500mil in the following years.
The research house kept a 'market perform' rating on SD Guthrie, with a higher target price of RM4.80.
It also reaffirmed its CPO price forecast of RM4,100 per tonne in FY25 and RM4,000 per tonne in FY26.
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