SD Guthrie, Sarawak Plantation: Plantation Sector Report – Lag in export lifted inventories level
- Malaysia’s palm oil inventory level rose to 2.11m MT in Jul25 as export growth lagged seasonal supply recovery, driving stock levels higher
- CPO price should see near-term support from restocking activities and improved price competitiveness; however, upsides are likely capped by rising edible oil supply, higher stock levels, and macro headwinds
- Maintain NEUTRAL stance on the sector with average CPO price forecasts at RM4,100/MT for 2025E and RM4,000/MT for 2026E
Monthly data highlights
| Jul25 | MoM Chg. (%) | |
|---|---|---|
| m tonnes | ||
| CPO Price (RM/MT) | 4,112.50 | 3.6 |
| CPO Production | 1,812.42 | 7.1 |
| CPO Stock | 1,020.78 | -2.0 |
| PPO Stock | 1,092.50 | 10.4 |
| PO Stock | 2,113.28 | 4.0 |
| PO Export | 1,309.06 | 3.8 |
| PO Import | 61.04 | -12.8 |
Source: MPOB, Phillip Research
Key plantation statistics
| 2024 M MT | 2025E M MT | |
|---|---|---|
| Beginning stocks | 2.29 | 1.71 |
| CPO production | 19.34 | 19.40 |
| Import | 0.25 | 1.05 |
| Export | 16.90 | 17.06 |
| Ending stocks | 1.71 | 1.80 |
| RM/MT | RM/MT | |
| CPO price (local delivery) | 3,809.5 | 4,100.0 |
Source: Phillip Research forecasts
PO price vs. SBO price
| 11 Aug25 US$ MT | |
|---|---|
| BMD PO price (3-mths) | 1,003.54 |
| CBOT SBO price (3-mths) | 1,170.43 |
| Discount/premium spread | 166.89 |
| 5-years mean | 223.3 |
Source: Bloomberg, Phillip Research
Jul25: Exports fall short of supply growth, driving inventory build
Malaysia’s palm oil exports rose 3.8% MoM to 1.31m MT in Jul25, supported by stronger restocking demand from India ahead of a potential reversal in its recent CPO import duty cut amid speculation of policy measures to protect local farmers. Intertek data showed PO exports to India surged 23% MoM to 305k tonnes. Nevertheless, cumulative 7M25 exports contracted 10.5% YoY to 8.26m MT, as key buyers continued to favor more competitively priced Indonesian supplies. Stock levels rose for a second consecutive month, up 82k MT (+4.0% MoM) to 2.11m MT – the highest since Dec23, driven by higher processed PO stocks (+10.4% MoM; +32.5% YoY), stronger CPO output, and elevated opening stocks. Inventories stood 20.4% higher YoY (Jul24: 1.75m MT). We expect stockpiles to remain elevated in the near term, likely until Sept-Oct25, with potential drawdown limited to restocking demand from India ahead of Deepavali.
CPO production strengthens on seasonal crop recovery
Malaysia’s CPO production increased 7.1% MoM to 1.81m MT in Jul25, reflecting the seasonal recovery in oil palm crop cycles. Peninsular Malaysia led the increase, rising 14.4% MoM to 1.13m MT, while output in Sabah and Sarawak slipped 4.5% MoM to 347k MT and 1.7% MoM to 338K MT, respectively. The national oil extraction rate (OER) edged higher to 19.82% (+0.1% MoM) on improved FFB yields, which rose 5.5% to 1.53 MT/ha. Cumulative 7M25 production was marginally higher +0.6% YoY, to 10.78m MT, aided by a recovery in 2Q25 output. We expect production to strengthen further in the months ahead as harvesting accelerates into the 3Q25 peak season, in tandem with Indonesia. We maintain our 2025 CPO production forecast at 19.4m MT (+0.3% YoY), with improvements from better labour availability and estate management likely tempered by structural headwinds, including stagnant yields and muted replanting activity.
CPO price averaged RM4,113/MT in Jul25, up by 3.6% MoM
The MPOB locally-delivered CPO price averaged RM4,113/MT in Jul25 (+3.6% MoM; Jun25: RM3,969/MT), lifted by expectations of stronger import demand ahead of festive-driven restocking in India and China, and tracking gains in soybean oil prices in the US and Brazil amid firmer biofuel demand following higher proposed blending volumes. For 7M25, the average CPO price rose 7.4% YoY to RM4,310/MT (7M24: RM4,014/MT), supported by robust 1Q25 pricing. We expect the vegetable oil market to remain volatile, reflecting persistent uncertainties in the agriculture sector and global macro conditions. CPO prices are projected to trade within RM3,900–4,300/MT in 3Q25, with 2H25 averaging at RM4,000/MT. While short-term support for CPO prices may stem from festive restocking and improved price competitiveness, we remain cautious given elevated market volatility, rising edible oil supply, higher stock levels, and broader macroeconomic risks, including potential trade disruptions. Downside risks should be mitigated by expectations of slower output growth (particularly in Indonesia due to fire incidents in Sumatera), stronger biodiesel demand, and a narrower PO-SBO price discount. The current discount of US$167/MT is below the 5-year average of US$223/MT, enhancing PO’s competitiveness among price-sensitive importing countries.
MPOB (local-delivery) monthly price
Source: Phillip Research forecasts
Noorhayati Maamor
Maintain NEUTRAL rating
We reiterate our NEUTRAL stance on the plantation sector, maintaining our 2025-26 CPO price forecasts at RM4,100/MT and RM4,000/MT, respectively. For sector exposure, we like SD Guthrie (BUY; TP: RM5.21) and Sarawak Plantation (BUY; TP: RM2.88) for their scalable upstream operations and solid balance sheets. Key risks to our sector view include 1) higher/lower-than-anticipated production, 2) stronger/weaker-than-anticipated global demand, 3) changes in policies and taxes of edible oils import/export, 4) volatility in global Brent crude oil prices, and 5) broader macroeconomic uncertainties.
Table 1: Malaysia’s monthly CPO price vs PO stocks
Source: MPOB, Phillip Research
Table 2: Malaysia’s monthly stocks, productions and imports
Source: MPOB, Phillip Research
Table 3: Monthly CPO production trend
Source: MPOB, Phillip Research
Table 4: Monthly PO total exports trend
Source: MPOB, Phillip Research
Table 5: Monthly data highlight – Jul25
| Jul-24 | Jun-25 | Jul-25 | YTD24 | YTD25 | MoM | YoY | YTD25 | |
|---|---|---|---|---|---|---|---|---|
| Average CPO Price (RM/MT) | 4,034.00 | 3,969.00 | 4,112.50 | 4,013.86 | 4,309.50 | 3.6 | 1.9 | 7.4 |
| CPO Production (m tonnes) | 1.84 | 1.69 | 1.81 | 10.72 | 10.78 | 7.1 | (1.6) | 0.6 |
| Palm Oil Export (m tones) | 1.70 | 1.26 | 1.31 | 9.23 | 8.26 | 3.8 | (22.9) | (10.5) |
| Ending Stocks (m tonnes) | 1.75 | 2.03 | 2.11 | nm | nm | 4.0 | 20.4 | nm |
Source: Bloomberg, Phillip Research forecasts
Table 6: Peer comparison table
| Ticker | Stock | FYE | Rating | Price (RM) | TP (RM) | Upside (%) | Shariah Y/N | Mkt Cap | Core PE (x) | Core EPS Growth (%) | P/BV (x) | Div. Yield (%) | ROE (%) | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2025E | 2026E | 2025E | 2026E | 2025E | 2025E | 2025E | |||||||||
| SDG MK | SD Guthrie | Dec | BUY | 4.91 | 5.21 | 6.1 | Y | 33,956.2 | 19.1 | 20.7 | 14.3 | -8.1 | 1.8 | 3.1 | 9.3 |
| IOI MK | IOI Corp | Jun | HOLD | 3.74 | 3.84 | 2.7 | Y | 23,201.8 | 19.5 | 19.7 | 1.9 | -1.2 | 1.9 | 2.5 | 9.9 |
| KLK MK | KLK | Sep | HOLD | 19.42 | 19.60 | 0.9 | Y | 21,627.3 | 19.4 | 21.5 | 44.0 | -9.5 | 1.5 | 3.1 | 7.8 |
| GENP MK | GENP | Dec | HOLD | 4.92 | 5.27 | 7.1 | Y | 4,414.0 | 13.6 | 14.0 | -2.3 | -2.9 | 0.8 | 4.3 | 6.0 |
| HAPL MK | HAPL | Dec | HOLD | 2.01 | 1.84 | -8.5 | Y | 1,607.4 | 10.7 | 10.9 | 2.2 | -2.5 | 0.7 | 5.0 | 6.9 |
| SOP MK | SOP | Dec | HOLD | 3.44 | 3.01 | -12.5 | Y | 3,076.0 | 7.4 | 8.0 | -5.2 | -7.9 | 0.7 | 2.9 | 10.1 |
| SPLB MK | SPLB | Dec | BUY | 2.59 | 2.88 | 11.2 | Y | 722.7 | 8.5 | 8.1 | 14.5 | 5.4 | 0.9 | 3.9 | 10.1 |
| Total/Simple Average | 88,605.3 | 14.0 | 14.7 | 9.9 | -3.8 | 1.2 | 3.5 | 8.6 | |||||||
| Total/Weighted Average | 18.3 | 19.6 | 16.6 | -6.2 | 1.6 | 3.0 | 8.9 | ||||||||
Source: Bloomberg, Phillip Research forecasts *calendarized data
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