Latest news with #IOICorp
The Star
31-07-2025
- Business
- The Star
High CPO prices to lift IOI Corp earnings
RHB Research said the company's outlook remains positive as upstream earnings will continue to do well on strong CPO prices. PETALING JAYA: IOI Corp Bhd is expected to deliver stronger earnings in the coming financial years as it benefits from elevated crude palm oil (CPO) prices while pursuing fresh income streams through new ventures as well as mergers and acquisitions. The group is targeting fresh fruit bunch (FFB) output growth and cost containment measures that could support margins going forward. According to RHB Research, which met with IOI Corp's management recently, the company's outlook remains positive as upstream earnings will continue to do well on strong CPO prices. This is further supported by the group's embarking on new ventures to diversify its income streams. The research house said the group's valuation was still appealing, trading at 17.5 times its forecast price-earnings ratio for 2026, at the lower end of the 17 to 22 times range of peers. On production, it noted that IOI Corp achieved FFB growth of 1.3% year-on-year (y-o-y) in the financial year ended June 30, 2025 (FY25) – below its initial 3% target. 'While output saw a mini peak in April, IOI Corp expects production to pick up in July, with a bigger peak in the August to September period,' it said. For FY26, the group was targeting FFB output growth of 3% to 5% on the back of better weather conditions in line with RHB Research's 4% forecast. The company was also expected to keep unit costs in check. 'IOI Corp expects FY25 costs to come in at around RM2,000 to RM2,100 per tonne,' RHB Research said, adding that it had already secured fertiliser requirements for the first half of FY26 at flat prices y-o-y. However, a 2% to 3% rise in costs could result from minimum wage adjustments and Employees Provident Fund contribution requirements. On regulatory risks, RHB Research said IOI Corp would face minimal impact from the government's expanded sales and service tax (SST) and US tariffs. The group had obtained SST exemptions for its oleochemicals operations and over 90% of its trading volumes comprised CPO and palm olein, which were not subjected to the tax. 'There is no significant impact as 90% of Malaysian CPO production is exported to the European Union as certified products, with less than 2% exported to the United States,' it added. Looking ahead, IOI Corp was actively seeking brownfield upstream land bank in Malaysia and Indonesia and opportunities in specialty oleochemicals for the pharmaceutical and personal care sectors. It also expressed optimism over its 33% stake in a pulp and paper joint venture with Nextgreen Global Bhd to turn oil palm empty fruit bunches into renewable products. 'The first phase of the plant (150,000 tonnes) should be operational by 2028, with potential earnings before interest and tax (ebit) contribution of RM30mil to RM50mil,' RHB Research said. The group's diversification efforts extended to coconut plantations, where 3,500ha had already been planted, targeting 4,600ha in total. This business could bring in RM60mil to RM70mil in ebit at full maturity. RHB Research reiterated its 'buy' call on IOI Corp, maintaining a sum-of-parts-based target price of RM4.30 with a 2% environmental, social and governance premium.
The Star
31-07-2025
- Business
- The Star
IOI's upstream earnings to ride on strong CPO prices
PETALING JAYA: IOI Corp Bhd is expected to deliver stronger earnings in the coming financial years as it benefits from elevated crude palm oil (CPO) prices while pursuing fresh income streams through new ventures and mergers and acquisitions. The group is also targeting fresh fruit bunches (FFB) output growth and cost containment measures that could support margins going forward. According to RHB Research, which met with IOI Corp's management recently, the outlook remains positive as upstream earnings will continue doing well on strong CPO prices. This is further supported by the group's embarking on new ventures to diversify its income streams. The brokerage said the group's valuation was still appealing, trading at 17.5 times its forecast price-earnings ratio for 2026, at the lower end of the 17 to 22 times range of peers. On production, RHB Research noted that IOI achieved FFB growth of 1.3% year-on-year (y-o-y) in the financial year (FY) ended June 30, 2025, below its initial 3% target. 'While output saw a mini peak in April, IOI expects production to pick up again in July, with a bigger peak in August-September,' it said. For FY26, the group was targeting FFB output growth of 3-5% on the back of better weather conditions, in line with RHB Research's 4% forecast. The company was also expected to keep unit costs in check. 'IOI expects FY25 costs to come in at around RM2,000-RM2,100 per tonne (flattish y-o-y),' RHB Research said, adding that it had already secured fertiliser requirements for the first half of FY26 at flat prices y-o-y. However, a 2-3% rise in costs could result from minimum wage adjustments and Employees Provident Fund contribution requirements. On regulatory risks, RHB Research said IOI would face minimal impact from the government's sales and service tax (SST) and US tariffs. The group had obtained SST exemptions for its oleochemicals operations and over 90% of its trading volumes comprised CPO and palm olein, which were not subjected to the tax. 'There is no significant impact to IOI as 90% of Malaysian CPO production is exported to the European Union as certified products, with less than 2% exported to the United States,' it added. Looking ahead, IOI Corp was actively seeking brownfield upstream landbanks in Malaysia and Indonesia and opportunities in specialty oleochemicals for the pharmaceutical and personal care sectors. It also expressed excitement over its 33% stake in a pulp and paper joint venture with Nextgreen Global Bhd to turn oil palm empty fruit bunches into renewable products. 'The first phase of the plant (150,000 tonnes) should be operational by 2028, with potential earnings before interest and tax (ebit) contribution of RM30mil-RM50mil,' RHB Research said. The group's diversification efforts extended to coconut plantations, where 3,500 hectares had already been planted, targeting 4,600 hectares in total. This business could bring in RM60mil-RM70mil in ebit at full maturity. RHB Research reiterated its 'buy' call on IOI, maintaining a sum-of-parts-based target price of RM4.30 with a 2% environmental, social and governance premium.
Malay Mail
17-06-2025
- Business
- Malay Mail
Govt to prioritise RON95 subsidy reform before carbon tax rollout in 2026
KUALA LUMPUR, June 17 — The government will prioritise the rationalisation of RON95 petrol subsidy this year before introducing a carbon tax in 2026, said Finance Minister II Datuk Seri Amir Hamzah Azizan. He said Malaysia must first address the issue of fuel subsidies, particularly those involving the energy sector, before implementing the carbon tax. The government had previously announced plans to roll out a carbon tax targeting the iron, steel, and energy industries by 2026, as outlined in Budget 2025. 'As we embark on this transition, we must ensure that no unintended consequences are embedded within our system. For instance, Malaysia has yet to implement a carbon tax as part of its policy framework. While it is scheduled for rollout by 2026, there are important precursor steps we must take,' he added. 'One major issue is the existing distortions in the system, especially the subsidies provided to the energy sector. A key objective now is to begin scaling back these subsidies. It doesn't make sense to impose taxes on one side while simultaneously providing subsidies for petrol, diesel, and other fuels,' he continued. Amir Hamzah made these remarks during a session titled 'Delivering Malaysia's Energy Transition', where he was a panellist alongside Deputy Minister of the Ministry of Energy Transition and Water Transformation (PETRA), Akmal Nasrullah Mohd Nasir. The session was chaired by Tan Sri Abdul Wahid Omar, a senior independent and non-executive director of IOI Corporation Bhd. MORE TO COME
New Straits Times
04-06-2025
- Business
- New Straits Times
IOI Corp's FFB growth target maintained at 2.5pct for FY2025
KUALA LUMPUR: IOI Corporation Bhd is maintaining its fresh fruit bunch (FFB) output growth target at 2.5 per cent for the financial year 2025 (FY25), said Hong Leong Investment Bank Bhd (HLIB Research). According to the bank, FFB production has rebounded both month-on-month and year-on-year since March 2025, supported by favourable weather conditions. "The output recovery has helped to narrow the group's year-to-date (YTD) FFB output decline to just 0.3 per cent for the first ten months of FY25. "Management indicated that the recovery trend is likely to continue in the coming months, potentially allowing IOI Corp to exceed its initial FY25 FFB output growth guidance of one to two per cent. "As such, we maintain our FY25 FFB output growth assumption of 2.5 per cent," it said in a note. Meanwhile, HLIB Research noted that several factors, including lower FFB output, the minimum wage hike effective February 2025, and a higher windfall profit levy, contributed to a 1.3 per cent YoY increase in IOI Corp's crude palm oil (CPO) production cost for the third quarter of FY25 (3Q25), raising it to RM2,530 per metric tonne. This brought the average CPO production cost for the first nine months of FY25 to RM2,104 per metric tonne, representing a 1.5 per cent decline compared to the same period last year. Given the anticipated strong FFB output in 4Q25, the firm said management remains confident in keeping the full-year CPO production cost below RM2,100 per metric tonne. Furthermore, HLIB Research said IOI Corp's decent performance in the manufacturing segment is expected to be sustained into 4Q25, if not improved further. It added that earnings at the manufacturing segment improved QoQ in 3Q25, with a profit of RM81.4 million, primarily driven by margin expansion at the refinery sub-segment, which more than mitigated weakness at the oleochemical and speciality fats sub-segments. "Management shared that earnings at the manufacturing segment should at least track 3Q25's performance (if not better), supported by sustained performance at the refining sub-segment arising from stable margins and improving availability of feedstock. "This includes gradual demand recovery for oleochemical products, albeit input prices remained elevated, as well as an improving contribution from the speciality fats sub-segment (as production normalised from the loss of production)," it said. On that note, HLIB Research also highlighted that IOI Corp's accelerated replanting programme, covering 8,000 to 9,000 hectares per annum since FY19, will continue into FY26. This is expected to reduce the group's average age profile to approximately 13 years by the end of FY26. The firm also noted that construction of the zero-waste paper pulp plant, undertaken through Nextgreen IOI Pulp Sdn Bhd (NIP), a 45 per cent owned joint venture unit of IOI Corp, is scheduled to begin in the first half of 2026 (1H26), with completion targeted by the end of 2027. Upon completion, it said the facility will have an initial annual production capacity of 150,000 metric tonnes of chemical bleached pulp.
The Star
27-05-2025
- Business
- The Star
IOI Corp sees higher FFB output in 2Q25
PETALING JAYA: IOI Corp Bhd is expecting higher fresh fruit bunch (FFB) production in second quarter 2025 (2CY25), due to improved weather conditions as well as the end of low production cycle. The plantation group said the expected production rise resulting in higher palm oil stock is likely to exert downward pressure on crude palm oil (CPO) price, although the resumption of demand from major buyers, following an earlier slowdown, and Indonesia's B40 biodiesel mandate are expected to provide key price support moving forward. Releasing its results for the third financial quarter (3Q25) ended March yesterday, IOI Corp saw net profit more than double year-on year (y-o-y) to RM262.3mil, underpinned by an 11.1% revenue growth to RM2.74bil. For the nine months ended March, the group posted a net profit of RM1.08bil, a 42.2% y-o-y jump, as turnover also grew by 18.6% to RM8.37bil. IOI Corp said the improved 3Q25 as well as cumulative results was primarily due to better contribution from its plantation segment, which benefitted from higher CPO and palm kernel prices realised, as well as higher share of associates results. Nevertheless, it said this was partially offset by higher CPO stock level, lower FFB production and lower oil extraction rate. The better performance saw earnings per share improve to 4.23 sen for 3Q25, and 17.47 sen for the nine months ended March 2025. Total dividends declared by IOI Corp stands at five sen per share, with the company not proposing any dividend for 3Q25 but having declared the aforementioned five sen in 2Q25. Separately, the group said the recent price correction has improved palm oil's competitiveness relative to other vegetable oils. 'Taking these factors into account, we project CPO price to range between RM3,700 and RM4,000 per tonne for the rest of our financial year ending June 30, 2025,' it said in a filing to Bursa Malaysia. Furthermore, the group said FFB production for 4Q25 is expected to recover significantly over 3Q25, while anticipating this higher FFB production will help sustain a steady financial performance, despite the lower CPO price expected for the quarter ending June. It added that the relatively high palm kernel oil price has kept sales volume and margins subdued for some time, but going forward, the recent decline in palm kernel oil price is expected to support improved sales volume and margins. 'Coupled with our continued focus on operational efficiency and cost optimisation, we anticipate to maintain our financial performance in the final quarter for the financial year ending June 2025,' said IOI Corp.
