RESEARCH
Sarawak Plantation Berhad
(5135 | SPLB MK) Main | Plantation
Upgrade to BUY
Revised Target Price RM2.88
(from RM2.29)
RETURN STATISTICS
| Price @ 21 Aug 2025 (RM) | 2.67 |
|---|---|
| Expected share price return (%) | +6.70 |
| Expected dividend yield (%) | +5.62 |
| Expected total return (%) | +12.32 |
SHARE PRICE CHART
Price performance (%)
| Absolute | Relative | |
|---|---|---|
| 1 month | 6.0 | 1.5 |
| 3months | 11.7 | 6.6 |
| 12 months | 24.8 | 28.2 |
INVESTMENT STATISTICS
| FYE Dec | 2025E | 2026F | 2027F |
|---|---|---|---|
| Revenue | 602.3 | 581.4 | 565.1 |
| EBITDA | 104.9 | 91.4 | 82.7 |
| PBT | 97.6 | 86.0 | 79.1 |
| Core NP | 75.1 | 66.2 | 60.9 |
| EPS (sen) | 26.9 | 23.7 | 21.8 |
| DPS (sen) | 0.2 | 0.2 | 0.1 |
| Dividend Yield (%) | 6.7% | 5.6% | 4.5% |
KEY STATISTICS
| FBM KLCI | 1,592.87 |
|---|---|
| Issue shares (m) | 279.03 |
| Estimated free float (%) | 26.43 |
| Market Capitalisation (RM’m) | 745.02 |
| 52-wk price range | RM2.11-RM2.70 |
| 3-mth average daily volume (m) | 0.04 |
| 3-mth average daily value (RM’m) | 0.10 |
| Top Shareholders (%) | |
| Ta Ann Holdings Bhd | 28.69 |
| State Financial Secretary | 25.52 |
| Amanah Khairat Yayasan Budaya | 4.16 |
Upgrade to BUY with a revised TP of RM2.88. Our TP for SPB is upgraded
to RM2.88 (previously RM2.29), as we rollover our valuation-based year to
FY26F EPS of 24.0sen, pegged to a PER of 12x, slightly above 5-year
historical +1SD. We upgrade SPB to BUY from NEUTRAL as the share price
is highly connected with CPO movement c. 0.89 correlation, hence any
upward trajectory in CPO prices would provide trading opportunity in the
stock.
Valuation is still attractive at high single digit, versus its peers which already
low teens, this presents buying opportunity. Its earnings outlooks remain
stable, driven by expanding harvestable area of nearly about 1,500 ha,
while cost of production in the downward trend, as the company adopts a
more stringent approach FFB purchasing strategy.
1HFY25 came in within estimates. After adjusting EI’s, 2QFY25 core
PATAMI of RM36.3m (+6.5%yoy) came in within our and street expectation
full year forecast, accounting for 48% and 53%, respectively. Profitability
was well supported by higher operating profit circa Rm25.9m as margin
inched up by +1.5ppts due to decent purchasing strategy.
Oil palm profitability. Earnings across the board, are positive, as both
segments recorded decent margins. Estate operations registered RM23.8m
(+10.8%yoy) profit thanks to the elevated FFB selling price which was above
RM700/Mt, while mills operation earnings jumped to RM6.5m (+29.9%yoy),
driven by higher average CPO and PK price realized, circa RM4,039/Mt
(+0.8%yoy) and PK of RM3,175/Mt (+40.9%yoy), respectively. PK price
expected to be continued high for the rest of the year due shortage in rival
coconut oil in Philippines.
Oil palm operations. Operationally, FFB production relatively up to 84,510
Mt (+5.3%yoy), well supported by productive estate activity, as uneven
weather seems normalised. CPO production on the other hand, down by –
9.1%yoy, following reduced FFB external purchased, as the management
prioritised higher standard of crops during the elevated CPO prices traded.
As a results, FFB yield, OER and estimated all-in cost of production remained
stable at 4.32Mt/Wha, 19.87% and RM2,500/Mt bringing the estate and
mill margins remain satisfactory.
Earnings. We are retaining our earnings estimate as it aligns with baseline
projection. Note that, SPB is purely local company and well insulated from
Indonesia’s regulatory risk.
Sarawak Plantation: 2QFY25 Results Summary
| FYE Dec (RM’m) | Quarterly results | Cumulatively results | ||||||
|---|---|---|---|---|---|---|---|---|
| 2QFY24 | 1QFY25 | 2QFY25 | QoQ (%) | YoY (%) | 1H24 | 1H25 | YoY (%) | |
| Revenue | 131.5 | 135.5 | 131.0 | -3.3 | -0.4 | 258.8 | 266.5 | 3.0 |
| Operating profit | 24.1 | 25.4 | 25.9 | 2.1 | 7.6 | 38.2 | 51.3 | 34.4 |
| Chg in fair value biological assets | 8.9 | 4.1 | 9.0 | >100 | 0.9 | 19.9 | 13.1 | -34.2 |
| PBT | 34.5 | 31.0 | 36.8 | 18.6 | 6.7 | 60.8 | 67.7 | 11.4 |
| Tax Expense | -8.5 | -8.1 | -9.5 | NM | NM | -15.6 | -17.6 | NM |
| PATAMI | 25.7 | 22.6 | 26.9 | 18.8 | 4.6 | 44.8 | 49.5 | 10.6 |
| Core PATAMI | 16.8 | 18.5 | 17.9 | -3.3 | 6.5 | 24.6 | 36.3 | 47.4 |
| Core EPS (sen) | 6.0 | 6.6 | 6.4 | -3.3 | 6.5 | 8.8 | 13.0 | 47.4 |
Growth & Margin (%)
| +/- ppts | +/- ppts | |||||||
|---|---|---|---|---|---|---|---|---|
| OP margin (%) | 18.3 | 18.7 | 19.8 | 1.1 | 1.5 | 14.7 | 19.2 | 4.5 |
| PBT margin (%) | 26.2 | 22.9 | 28.1 | 5.2 | 1.9 | 23.5 | 25.4 | 1.9 |
| Core PATAMI margin (%) | 12.8 | 13.6 | 13.6 | 0.0 | 0.9 | 9.5 | 13.6 | 4.1 |
| Effective tax rate (%) | 24.8 | 26.1 | 26.0 | -0.2 | 1.2 | 25.7 | 26.0 | 0.4 |
Source: Company, MBSBR
Sarawak Plantation: Segmental Breakdown & Operational Stats.
| FYE Dec (RM’m) | Quarterly results | Cumulatively results | ||||||
|---|---|---|---|---|---|---|---|---|
| 2QFY24 | 1QFY25 | 2QFY25 | QoQ (%) | YoY (%) | 1H24 | 1H25 | YoY (%) | |
| Revenue | ||||||||
| – Estate Operations | 59.1 | 65.6 | 65.9 | 0.6 | 11.6 | 110.1 | 131.5 | 19.5 |
| – Mill Operations | 120.4 | 122.3 | 119.9 | -1.9 | -0.4 | 238.3 | 242.2 | 1.6 |
| Operating Profit | ||||||||
| – Estate Operations | 21.4 | 25.2 | 23.8 | -5.5 | 10.8 | 33.0 | 48.9 | 48.1 |
| – Mill Operations | 5.0 | 4.2 | 6.5 | 54.2 | 29.9 | 11.0 | 10.7 | -2.8 |
| Operating Profit Margins (%) | ||||||||
| – Estate Operations | 36.3 | 38.4 | 36.0 | -2.3 | -0.2 | 30.0 | 37.2 | 7.2 |
| – Mill Operations | 4.2 | 3.5 | 5.4 | 2.0 | 1.3 | 4.6 | 4.4 | -0.2 |
| Operational Stats. | ||||||||
| FFB Production ‘Mt | 80,267 | 73,940 | 84,510 | 14.3 | 5.3 | 149,938 | 158,450 | 5.7 |
| CPO Production ‘Mt | 26,962 | 22,106 | 24,495 | 10.8 | -9.1 | 53,566 | 46,601 | -13.0 |
| Avg CPO Price Realised (RM/Mt) | 4,007 | 4,728 | 4,039 | -14.6 | 0.8 | 3,952 | 4,368 | 10.5 |
| Avg PK Price Realised (RM/Mt) | 2,253 | 3,451 | 3,175 | -8.0 | 40.9 | 2,156 | 3,305 | 53.3 |
Source: Company, MBSBR
FINANCIAL SUMMARY
Income Statement
| (RM’m) | 2023A | 2024A | 2025E | 2026F | 2027F | Cash Flow (RM’m) | 2023A | 2024A | 2025E | 2026F | 2027F |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | 1,066.5 | 1,019.8 | 1,048.5 | 996.6 | 967.2 | PBT | 197.8 | 219.9 | 201.3 | 180.0 | 163.1 |
| Operating Profit | 209.8 | 208.0 | 258.0 | 253.7 | 250.4 | Operating cash flow | 226.7 | 240.6 | 245.4 | 231.5 | 213.7 |
| PBT | 197.8 | 219.9 | 258.5 | 254.2 | 250.8 | Investing cash flow | -35.9 | -66.8 | -55.0 | -55.0 | -55.0 |
| PATAMI | 95.1 | 135.7 | 157.3 | 154.8 | 152.8 | Financing cash flow | -328.4 | -148.7 | -34.5 | -34.5 | -34.5 |
| Core PATAMI | 80.5 | 122.7 | 157.3 | 154.8 | 152.8 | Net cash flow | -137.6 | 25.1 | 155.9 | 142.0 | 124.2 |
| EPS (sen) | 5.8 | 8.9 | 11.4 | 11.2 | 11.1 | Beginning cash flow | 376.2 | 251.0 | 261.9 | 417.8 | 559.8 |
| PER (x) | 12.4x | 10.1x | 9.9x | 11.2x | 12.2x | Ending cash flow | 251.0 | 261.9 | 417.8 | 559.8 | 684.1 |
| DPS (sen) | 0.10 | 0.20 | 0.18 | 0.15 | 0.12 | ||||||
| Dividend yield (%) | 3.7% | 7.5% | 6.7% | 5.6% | 4.5% |
Balance Sheet
| (RM’m) | 2023A | 2024A | 2025E | 2026F | 2027F | Margins | 2023A | 2024A | 2025E | 2026F | 2027F |
|---|---|---|---|---|---|---|---|---|---|---|---|
| PPE | 1,277.8 | 1,338.0 | 1,287.3 | 1,240.4 | 1,197.1 | EBITDA margin | 29.0% | 32.8% | 30.2% | 29.2% | 28.0% |
| Right-of-use Assets | 253.4 | 248.5 | 238.2 | 228.3 | 218.8 | EBIT margin | 19.7% | 20.4% | 19.2% | 18.0% | 16.8% |
| Biological assets | 366.0 | 366.4 | 365.2 | 364.0 | 362.8 | PBT margin | 18.5% | 21.6% | 19.2% | 18.1% | 16.9% |
| Non-current assets | 2,200.4 | 2,290.2 | 2,249.4 | 2,210.2 | 2,175.7 | Core PATAMI margin | 9.7% | 11.8% | 11.8% | 11.1% | 10.4% |
| Inventories | 93.7 | 102.7 | 105.6 | 100.3 | 97.4 | ||||||
| Trade receivables | 36.2 | 44.1 | 45.4 | 43.1 | 41.9 | ||||||
| Derivative assets | 0.295 | 0.298 | 0.298 | 0.298 | 0.298 | ||||||
| Current assets | 644.6 | 457.6 | 617.6 | 752.2 | 872.2 | ||||||
| Total Assets | 2,845.0 | 2,747.8 | 2,867.0 | 2,962.4 | 3,047.9 | ||||||
| Loans & borrowings | 191.2 | 201.1 | 201.1 | 201.1 | 201.1 | ||||||
| Trade & other payables | 123.5 | 108.4 | 111.4 | 105.9 | 102.8 | ||||||
| Current liabilities | 317.9 | 317.2 | 320.3 | 314.8 | 311.6 | ||||||
| Loans & borrowings | 111.0 | 58.6 | 58.6 | 58.6 | 58.6 | ||||||
| Non – Current liabilities | 221.9 | 169.6 | 169.6 | 169.6 | 169.6 | ||||||
| Liabilities & equity | 2,845.0 | 2,747.8 | 2,867.0 | 2,962.4 | 3,047.9 |
Source: Bloomberg, MBSBR
MBSB RESEARCH (formerly known as MIDF RESEARCH) is part of MBSB Investment
Bank Berhad (formerly known as MIDF Amanah Investment Bank Berhad)
(Bank Pelaburan) (A Participating Organisation of Bursa Malaysia Securities Berhad)
DISCLOSURES AND DISCLAIMER
This report has been prepared by MBSB Investment Bank Berhad (formerly known as MIDF AMANAH INVESTMENT
BANK BERHAD) 197501002077 (24878-X).
It is for distribution only under such circumstances as may be permitted by applicable law. Readers should
be fully aware that this report is for information purposes only. The opinions contained in this report are
based on information obtained or derived from sources that we believe are reliable. MBSB INVESTMENT
BANK BERHAD (formerly known as MIDF AMANAH INVESTMENT BANK BERHAD) makes no representation or
warranty, expressed or implied, as to the accuracy, completeness or reliability of the information contained
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MBSB INVESTMENT BANK (formerly known MIDF INVESTMENT BANK): GUIDE TO RECOMMENDATIONS
STOCK RECOMMENDATIONS
- BUY Total return is expected to be >10% over the next 12 months.
- TRADING BUY The stock price is expected to rise by >10% within 3 months after a Trading Buy rating has been
assigned due to positive news flow. - NEUTRAL Total return is expected to be between -10% and +10% over the next 12 months.
- SELL Total return is expected to be <-10% over the next 12 months.
- TRADING SELL The stock price is expected to fall by >10% within 3 months after a Trading Sell rating has been
assigned due to negative news flow.
SECTOR RECOMMENDATIONS
- POSITIVE The sector is expected to outperform the overall market over the next 12 months.
- NEUTRAL The sector is to perform in line with the overall market over the next 12 months.
- NEGATIVE The sector is expected to underperform the overall market over the next 12 months.
ESG RECOMMENDATIONS* – source Bursa Malaysia and FTSE Russell
- ☆☆☆☆ Top 25% by ESG Ratings amongst PLCs in FBM EMAS that have been assessed by FTSE Russell
- ☆☆☆ Top 26-50% by ESG Ratings amongst PLCs in FBM EMAS that have been assessed by FTSE Russell
- ☆☆ Top 51%- 75% by ESG Ratings amongst PLCs in FBM EMAS that have been assessed by FTSE Russell
- ☆ Bottom 25% by ESG Ratings amongst PLCs in FBM EMAS that have been assessed by FTSE Russell
* ESG Ratings of PLCs in FBM EMAS that have been assessed by FTSE Russell in accordance with FTSE Russell ESG Ratings Methodology
MBSB Research
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