PLANTATION
 [%vEfo%] [%ibXq%] [%TSRf%] 
Research by Kenanga
Neutral

“1QCY24 Results Review: A Patience Game”

1QCY24 plantation sector earnings were muted. Downstream continued to disappoint which dampened earnings of all three big integrated players, SDG (formerly SIMEPLT), IOI, and KLK. Upstream earnings held better on easier costs and firm CPO prices: thus, smaller, more upstreamcentric players fared better. Meanwhile, SDG’s solar farming plans highlight a lucrative alternative land use for the sector but limited sector-wide impact is expected as many planters are likely to stay oil palm-centric. Maintain NEUTRAL. PBV of 1.1x is not demanding but there is no strong upside catalyst. Higher CPO would be such a catalyst but supply-demand scenario suggests firm rather than bullish CPO prices ahead. We continue to prefer players with the ability and/or flexibility to grow such as PPB (OP; TP: RM17.50), TSH (OP; TP: RM1.30), and UMCCA (OP; RM6.00).

Analyst(s):
Teh Kian Yeong 
[%zPlU%]

PLANTATION
 $KLSE-PPB $KLSE-TSH $KLSE-UMCCA 
Research by Kenanga
Neutral

“1QCY24 Results Review: A Patience Game”

1QCY24 plantation sector earnings were muted. Downstream continued to disappoint which dampened earnings of all three big integrated players, SDG (formerly SIMEPLT), IOI, and KLK. Upstream earnings held better on easier costs and firm CPO prices: thus, smaller, more upstreamcentric players fared better. Meanwhile, SDG’s solar farming plans highlight a lucrative alternative land use for the sector but limited sector-wide impact is expected as many planters are likely to stay oil palm-centric. Maintain NEUTRAL. PBV of 1.1x is not demanding but there is no strong upside catalyst. Higher CPO would be such a catalyst but supply-demand scenario suggests firm rather than bullish CPO prices ahead. We continue to prefer players with the ability and/or flexibility to grow such as PPB (OP; TP: RM17.50), TSH (OP; TP: RM1.30), and UMCCA (OP; RM6.00).

Analyst(s):
Teh Kian Yeong 
tehky@kenanga.com.my