JPG (5323): Strong ESG & Downstream Potential Drive RHB’s BUY Call, MYR1.45 Target
Summary (TL;DR):
- Research Firm: RHB Investment Bank
- Subject: JPG / JPG (5323)
- Core Rating: BUY
- Target Price / Top Picks: MYR 1.45
- One-Liner: Johor Plantations Group (JPG) maintains an attractive valuation, supported by strong ESG credentials and promising downstream opportunities, despite anticipated CPO price volatility.
Report at a Glance
RHB Investment Bank released its latest research report on JPG on 2025-07-09, maintaining a “BUY“ rating with a target price of MYR 1.45. The core thesis of the report is that JPG’s attractive valuation, strong ESG credentials, and promising downstream prospects make it a compelling investment, even amidst expected CPO price volatility and a more balanced fundamental outlook for 2026.
Investment Thesis (The Bull Case)
- Point 1: JPG is trading at an attractive valuation (11x FY26F P/E) which is lower than its peer range of 12-15x, coupled with one of the highest ESG scores (3.2 out of 4) among covered companies.
- Point 2: The company possesses promising downstream prospects that are expected to contribute to future growth.
- Point 3 / Key Beneficiaries: Expected higher Fresh Fruit Bunch (FFB) production output and continued demand for sustainable palm oil will support performance.
Potential Risks (The Bear Case)
- Risk 1: Persistent CPO price volatility, exacerbated by ongoing geopolitical risks and their impact on crude oil prices.
- Risk 2: Adverse weather conditions could negatively impact FFB production and overall output.
- Risk 3: Unfavorable changes in the global vegetable oil industry’s supply and demand dynamics.
Financial Forecast Summary
The analyst’s financial projections for the coming years are as follows:
| Fiscal Year (YE to December) | FY25F | FY26F | FY27F |
|---|---|---|---|
| Revenue (RM mil) | 1,637 | 1,702 | 1,794 |
| Net Profit (RM mil) | 277 | 269 | 268 |
| EPS (sen) | 11 | 11 | 11 |
| DPS (sen) | 6 | 5 | 5 |
| Dividend Yield (%) | 4.6 | 4.2 | 4.2 |
| P/E Ratio (x) | 10.84 | 11.16 | 11.20 |
(Source: RHB Investment Bank research report)
Valuation & Target Price
| Rating | BUY |
| Last Close Price | MYR 1.20 |
| Target Price (TP) | MYR 1.45 |
| Valuation Methodology | The new target price of MYR 1.45 is based on a target P/E of 13x on FY26F earnings, benchmarked against peers and considering an unchanged ESG score of 3.2. |
Analyst’s Conclusion
- Overall Stance: RHB Investment Bank maintains its “BUY” rating on Johor Plantations Group, viewing its current valuation as attractive, underpinned by strong ESG performance and strategic downstream potential.
- Key Catalyst/Strength: The company’s robust ESG credentials, appealing valuation relative to its peers, and promising expansion into downstream operations are key drivers.
- Major Headwind/Risk: The primary concern remains the high volatility of CPO prices, significantly influenced by unpredictable geopolitical developments.
- What to Watch: Investors should monitor global supply and demand dynamics for vegetable oils, particularly CPO, and the impact of geopolitical events on commodity prices, alongside JPG’s progress in its downstream ventures.
Disclaimer: This article is a summary and interpretation of a research report published by RHB Investment Bank on 2025-07-09. All information is for reference purposes only and does not constitute investment advice. Investors should conduct their own independent research and due diligence and assume all associated risks.
