PETALING JAYA: Oil palm planters should see their second quarter ended June 30, 2026 (2Q26) financial results commencing from Aug 11 to be broadly in line with stronger year-to-date palm product prices and production trends, says Hong Leong Investment Bank Research.
The research house has maintained an “overweight” stance on plantation stocks and also maintained average crude palm oil (CPO) assumptions of RM4,450 per tonne for 2026 and RM4,300 for 2027.
For exposure to plantation stocks, it recommends Hap Seng Plantations Holdings Bhd as the top pick with a “buy” call and target price of RM2.89.
“Based on our estimates, every RM100/tonne increase in our average CPO price projection would lift the earnings of plantation companies under our coverage by 3% to 8%,” it said, adding that upstream earnings should improve both quarter-on-quarter (q-o-q) and year-on-year (y-o-y).
Planters under its coverage would likely register a q-o-q increase in upstream performance, reflecting seasonal upcycles in cropping and higher palm product prices.
Broadly higher upstream earnings can be expected y-o-y despite mixed fresh fruit bunch (FFB) output that would be supported by stronger palm product prices.
It noted that FFB output trends in 2Q26 among only two of the six planters under coverage (Genting Plantations Bhd and Kuala Lumpur Kepong Bhd) recorded positive FFB output growth, reflecting divergent production trends between Malaysia and Indonesia.
“We believe the improvement in Indonesia’s productivity was primarily driven by more favourable weather conditions, as the heavy rainfall experienced in parts of the country during 1Q26 (which disrupted and constrained crop evacuation) has largely subsided.”
It added that downstream performance would likely remain under pressure from larger export tax differences between Malaysia and Indonesia, Indonesian overcapacity, and higher palm kernel prices.
Meanwhile an analyst with another brokerage keep his CPO price per tonne assumptions for 2026 at RM4,400, while for 2027 and 2028 at RM4,500 and RM4,400, respectively.
According to him, these forecasts were relatively cautious as the strength of the El Nino remains uncertain.
In a recent report, RHB Research said Malaysian Palm Oil Board agronomists found that El Nino could have a significant impact on plantation yields, with average FFB yields typically falling by 10% to 14% in the first year.
Source : The Star
