TSH (9059): Navigating Volatility Amidst Limited Growth Visibility
Summary (TL;DR):
- Research Firm: RHB Investment Bank
- Subject: TSH / TSH (9059)
- Core Rating: HOLD
- Target Price / Top Picks: MYR 1.10
- One-Liner: RHB anticipates 2026 to be a more fundamentally balanced year for palm oil, with lower CPO prices, but warns that geopolitical risks will continue to drive significant market volatility.
Report at a Glance
RHB Investment Bank released its latest research report on TSH on 2025-07-09, maintaining a “HOLD“ rating with a target price of MYR 1.10 (down from MYR1.15). The core thesis of the report is that while 2026 is expected to see a more balanced supply-demand dynamic for palm oil, geopolitical uncertainties will likely keep CPO prices volatile. The analyst views TSH as relatively pricey compared to its peers given its concentration in Indonesia.
Investment Thesis (The Bull Case)
- Point 1: Global supply of 17 oils and fats complex is projected to improve in 2026F, with partial recovery in palm, sunflower, and rapeseed supplies, alongside continued growth from soybeans.
- Point 2: Demand for CPO is expected to pick up, particularly from price-sensitive countries like India, Pakistan, and Bangladesh, due to more attractive relative prices (CPO currently trades at a discount to SBO).
- Point 3 / Key Beneficiaries: TSH Resources, with over 90% of its planted area in Indonesia, stands to benefit from any positive shifts in global palm oil demand and pricing dynamics.
Potential Risks (The Bear Case)
- Risk 1: CPO prices are expected to remain highly volatile due to the ongoing geopolitical situation, despite a more balanced fundamental supply-demand outlook.
- Risk 2: Adverse weather conditions pose a significant risk to Fresh Fruit Bunch (FFB) production output, directly impacting the company’s earnings.
- Risk 3: TSH is currently trading at 10.9x FY26F P/E, which is at the higher end of its peer range (6-11x 2026F), limiting potential upside. The company also withdrew from RSPO membership in FY24, leading to a lower ESG score.
Financial Forecast Summary
The analyst’s financial projections for the coming years are as follows:
| Fiscal Year (YE to Dec) | FY25F | FY26F | FY27F |
|---|---|---|---|
| Revenue (RM mil) | 1,055 | 1,049 | 1,074 |
| Net Profit (RM mil) | 157 | 142 | 163 |
| EPS (sen) | 11 | 10 | 12 |
| DPS (sen) | 2 | 2 | 2 |
| Dividend Yield (%) | 1.8 | 1.8 | 1.8 |
| P/E Ratio (x) | 9.84 | 10.91 | 9.51 |
(Source: RHB Investment Bank research report)
Valuation & Target Price
| Rating | HOLD |
| Last Close Price | MYR 1.12 |
| Target Price (TP) | MYR 1.10 |
| Valuation Methodology | The target price is based on an unchanged 12x FY26F P/E, which implies an EV/ha of USD12,000/ha, aligning with the peer range of USD10,000-15,000/ha. |
Analyst’s Conclusion
- Overall Stance: RHB maintains a “HOLD” rating on TSH Resources, citing limited growth visibility and the stock’s relatively high valuation compared to its peers.
- Key Catalyst/Strength: The potential for a more balanced global supply-demand outlook for oils and fats in 2026, coupled with CPO’s competitive discount to SBO, could stimulate demand.
- Major Headwind/Risk: Persistent geopolitical risks are expected to maintain CPO price volatility, and TSH’s current valuation at the higher end of its peer group presents a key headwind.
- What to Watch: Investors should monitor global geopolitical developments, CPO price movements, FFB production output, and the competitiveness of TSH’s downstream processing division.
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.
