Johor Plantations earnings outlook trimmed on lower FFB growth
The research house has cut its earnings forecasts by three per cent for FY25 and FY26, and four per cent for FY27. It said the group's first-half 2025 results were broadly in line with its and market expectations.
"FFB output should improve in the second half of 2025 (2H25) as we head into the third-quarter peak season, but this may be offset by moderating crude palm oil (CPO) average selling prices," it noted.
RHB IB maintained its "Buy" call on Johor Plantations, raising the target price to RM1.50 from RM1.45.
Meanwhile, Hong Leong Investment Bank Bhd (HLIB) said Johor Plantations' CPO production cost, excluding PK credit, was RM2,147 per tonne in the second quarter of 2025, bringing the first-half average to RM2,263 per tonne.
"Management shared that CPO production cost will likely remain flattish for 2H25, bringing the full-year range to RM2,200 to 2,300 per tonne," it said.
It added that the impact of mandatory Employees Provident Fund contributions for foreign workers, expected to take effect in October, is seen as minimal, at around RM1.5 million annually.
The extension of the Sales and Service Tax is also expected to have little effect, aside from an estimated RM20 million increase in capital expenditure.
HLIB added that the Integrated Sustainable Palm Oil Complex is on track for completion in FY26. Once operational, management expects it to contribute about RM150 million in revenue in FY26, rising to RM700 million in FY27.
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