SDG: Strategic Diversification and Efficiency Initiatives Propel Positive Outlook

Investment bank TA Securities highlighted an in-depth review at its recent Investor Day, where the company showcased its transformative “One Stream” integrated model. This model signifies a strategic shift from a pure plantation focus to a diversified agribusiness enterprise. The presentation underscored robust operational resilience, technology-driven efficiency, and a strong commitment to sustainability, despite a prevailing market of stable palm oil prices.

Performance and Strategic Shift

The company outlined its strategy to enhance long-term value creation amidst market volatility and regulatory changes. Upstream operations demonstrated strengthened execution in 2025, notably with Malaysia’s inaugural tariff-free shipment of Roundtable on Sustainable Palm Oil (RSPO)-certified sustainable palm oil to the UK under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). This achievement reflects the group’s continuous drive towards automation-led productivity gains and human capital development. Production is anticipated to grow steadily across regions, supported by replanting initiatives, estate optimisation, and mechanisation. The group also leverages AI, data analytics, and R&D (such as GenomeSelect) to achieve higher yields and improved Oil Extraction Rates (OER), with record oil production noted in its Upstream Malaysia division.

Unlocking Value and Renewable Energy

A significant focus of the company’s strategy is unlocking strategic land value. Approximately 5,550 acres (2,246 ha) have been identified for potential industrial and renewable energy projects in strategically located growth corridors along the West Coast of Peninsular Malaysia. The company is actively pursuing solar energy development, currently operating 19 biogas plants with a total capacity of 28.57 Megawatt export (MWe), with plans to expand to 46 plants by 2030. The group also aims for a 1 GW solar capacity target in line with Malaysia’s National Energy Transition Roadmap. These initiatives are expected to create new revenue streams and bolster long-term value.

CPO Market Outlook

While the company demonstrates strong internal initiatives, the broader crude palm oil (CPO) market faces persistent stability. Malaysian palm oil stocks recently surpassed 3 million tonnes, a level not seen since 2018. Despite these high inventories, futures prices have remained broadly flat, reflecting market expectations of stable prices in the near term. Dr. Julian McGill expects CPO to trade in a range of RM3,900-RM4,100/tonne. The deferral of the B-50 mandate removes a key bullish driver, contributing to elevated near-term stocks and range-bound prices. However, Malaysia’s 2025 production exceeded 20 million tonnes, aided by favourable rainfall and sufficient labour.

Investment Bank’s Outlook

Following its assessment of the company’s strategic directions and operational progress, TA Securities has issued a BUY recommendation for the stock. The investment bank has set a Target Price (TP) of RM0.25, representing a potential upside of 25.0% from the last traded price of RM0.20.