Decent start to Sarawak Plantation's year
Sarawak Plantation's commendable results were mainly boosted by an increase in CPO prices and FFB production.
KUCHING (May 22): Excluding the gain on the fair value of biological assets (RM4 million) and minority interests (RM0.3 million), Sarawak Plantation Bhd (Sarawak Plantation) kicked off its first quarter of financial year 2025 (1QFY25) with core earnings of RM17.2 million, accounting for 21 per cent of the street's full-year expectations.
Analysts said the commendable results were mainly boosted by an increase in crude palm oil (CPO) prices and fresh fruit bunch (FFB) production.
The team with Public Investment Bank Bhd (PublicInvest Research) saw that Sarawak Plantation's topline improved from RM127.3 million to RM135.5 million, on the back of stronger CPO prices and increased FFB production.
Meanwhile, 1QFY25 FFB production climbed 6.1 per cent year on year (y-o-y) to 73,940 metric tonnes (MT) while third-party purchase FFB tumbled 28.7 per cent to 54,129MT.
Its 1QFY25 average CPO price surged from RM3,898 per MT to RM4,728 per MT while average palm kernel price jumped from RM2,062 per MT to RM3,451 per MT.
'1QFY25 FFB yield improved from 3.31MT per hectare (MT/ha) to 3.74MT/ha while its oil extraction rate (OER) slipped from 19.77 per cent to 19.05 per cent.
'This was dragged by lower FFB processed; lower oil content; and prolonged wet period that affected the transportation activities.'
The weather has normalised since April, leading to a strong production recovery in northern and central Sarawak regions.
PublicInvest Research expects Sarawak Plantation's production to peak in August compared to the usual October/November period.
Meanwhile, management has lowered its FFB production target by five per cent to 400,000MT to reflect the weaker-than-expected production in the beginning of the year. It has retained its replanting target of 2,800ha for this year.
There is no new planting activity being carried out. As of March-2025, mature area stood at 20,000ha while the immature area totaled 7,700ha. There is a plantable area of 2,000ha Average age profile stood at nine years.
Due to the persistent rainfall, the first round of fertiliser application only achieved 66 per cent. Meanwhile, the outstanding encumbered area stays around 2,000ha while there is no enhancement area.
It is worth noting that there is a new recruitment fee introduced by Sarawak state government with the one-off charge of RM1,800 per worker for the permit application starting this year, which could see a negligible financial impact on the company bottom line.
'The company has no forward sales policy in place, hence, we expect the realized CPO prices for the coming quarters to reflect the prevailing levels of less than RM4,000 per MT.
'Lastly, management has allocated capex of RM56 million with RM42 million set aside for replanting and the remaining RM14 million for mill upgrades and maintenance.' CPO first quarter palm oil Sarawak Plantation
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