TSH Resources Malaysia Company Update
RHB Small Cap Asean Research
9 July 2025
Agriculture | Plantation
Shariah Compliant
TSH Resources (TSH MK)
Limited Growth Visibility
- Maintain NEUTRAL, with new MYR1.10 TP from MYR1.15, 1% downside. We expect 2026 to be a more balanced year fundamentally, with lower YoY CPO prices, but geopolitical risks will translate to more volatility. We lower our CPO, but raise our PK price assumptions for FY25-27. Given >90% of TSH Resources’ planted area is in Indonesia, we believe the stock is relatively pricey, trading at 10.9x FY26F P/E, or at the higher end of its peer range of 6-11x 2026F.
- Spot CPO prices have moderated from MYR4,600-4,800/tonne in 1Q25 to a low of MYR3,780 in May, only to bounce back to MYR3,900-MYR4,100 currently. The decline was mainly driven by geopolitics in the light of US trade tariffs, wars, and crude oil prices falling as a result, all of which pushed CPO prices in the same direction. We highlight that the correlation between CPO prices and crude oil prices surged to 0.47 in Apr 2025 from -0.6 in 1Q25, and subsequently rose further to the current levels of 0.68, due to more geopolitical risks.
- What’s next for CPO prices? We expect CPO prices to remain volatile given the ever-changing geopolitical situation. Fundamentally however, global supply and demand will likely be more balanced in 2026F, as supply improves, while demand should pick up given the more attractive relative prices.
- Supply of 17 oils and fats complex is expected to improve YoY in 2026F, coming from a partial recovery of palm, sunflower and rapeseed supplies, as well as continued growth from soybeans. Still, the stock/usage ratio of the 17 oils and fats complex is still expected to remain below the historical average of 13.6%, at 12.9% for Oct 2025F/Sep 2026F, albeit up from 12.7% in 2025F. This leaves very little cushion in case of any short-term bullish supply or demand surprises, hence raising the risk of price volatility going forward.
- What does this mean for relative prices of vegetable oils and demand? Ignoring the noises from geopolitics, we expect 2026F to see: i) Muted soybean prices, due to continued strong supply in 2026F; ii) SBO prices remain supported at higher levels, due to the higher demand from increased US biofuel blending; iii) CPO prices to continue trading at a discount to SBO in the medium term (currently at USD217/tonne discount); and iv) demand from price sensitive countries like India, Pakistan, Bangladesh come back.
- We trim our CPO price to MYR4, 100/tonne (from MYR4,300) for 2025F and to MYR4,000 (from MYR4,100) for 2026F and 2027F; but raise PK prices to MYR3,300/tonne for 2025F (from MYR2,800) and to MYR3,200 for 2026F and 2027F (from MYR2,600). We also update for our latest in-house forex assumptions and adjust forecasts up by 7.2%, 3.0% and 2.6% for FY25-27.
- We lower TSH’s ESG score to 2.4 from 2.6, as it withdrew from RSPO membership in FY24, and we roll forward our valuation target to 2026F. With this, our TP falls to MYR1.10 (from MYR1.15) based on an unchanged 12x target P/E.
TSH Resources (TSH MK) – Price Close • Relative to FBM KLCI (RHS)
[Chart data from Jul-24 to Jun-25 is available in the original document]
Source: Bloomberg
Forecasts and Valuation
Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
---|---|---|---|---|---|
Total turnover (MYRm) | 1,067 | 1,020 | 1,055 | 1,049 | 1,074 |
Recurring net profit (MYRm) | 86 | 151 | 157 | 142 | 163 |
Recurring net profit growth (%) | (54.8) | 76.1 | 4.0 | (9.8) | 14.8 |
Recurring P/E (x) | 18.02 | 10.24 | 9.84 | 10.91 | 9.51 |
P/B (x) | 0.8 | 0.8 | 0.7 | 0.7 | 0.6 |
P/CF (x) | 6.82 | 6.43 | 5.67 | 5.30 | 4.85 |
Dividend Yield (%) | 2.2 | na | 1.8 | 1.8 | 1.8 |
EV/EBITDA (x) | 5.64 | 5.46 | 4.00 | 3.89 | 3.11 |
Return on average equity (%) | 5.5 | 5.0 | 7.6 | 6.5 | 7.0 |
Net debt to equity (%) | 2.3 | net cash | net cash | net cash | net cash |
Source: Company data, RHB
Overall ESG Score: 2.4 (out of 4)
E Score: 2.7 (GOOD)
S Score: 2.0 (MODERATE)
G Score: 2.4 (GOOD)
Please refer to the ESG analysis on the next page
Note: Small cap stocks are defined as companies with a market capitalisation of less than USD0.5bn.
Emissions And ESG
Trend analysis
In FY24, scope 1 emissions decreased to around 236k tonnes of CO2 equivalent (FY23: 256k tonnes of CO2 equivalent) and scope 2 emissions reduced to 5.1k tonnes of CO2 equivalent (FY23: 10.7k tonnes of CO2 equivalent). This brings to a decrease of around 10% in total emissions YoY.
Dec-22 | Dec-23 | Dec-24 | Dec-25 | |
---|---|---|---|---|
Scope 1 | 288,181 | 255,596 | 235,971 | na |
Scope 2 | 6,006 | 10,722 | 5,070 | na |
Scope 3 | na | 2,693 | 1,908 | na |
Total emissions | 294,187 | 269,011 | 242,949 | na |
Source: Company data, RHB
Latest ESG-Related Developments
TSH has achieved 100% MSPO certification for Malaysian estates and mills and has incorporated Scope 3 disclosures in GHG reporting. However, in FY24, TSH has withdrawn its RSPO membership.
ESG Unbundled
Overall ESG Score: 2.4 (out of 4)
Last Updated: 2 July 2025
E Score: 2.7 (GOOD)
TSH has recorded an 10% reduction in GHG emissions in 2024. Its renewable energy usage however, has dropped to 74% of total energy consumption from 92% in FY23.
S Score: 2.0 (MODERATE)
TSH commits to respect land tenure rights, in relation to FPIC, and human rights through their policies. In 2024, the company recorded zero fatalities and loss time injury frequency rate of 8.62 (-41% YoY).
G Score: 2.4 (GOOD)
50% of TSH’s board members are independent, but only 12.5% of them are female. While disclosure on director remuneration which includes salaries and bonuses are stated, it wasn’t on named basis. TSH has an in-house investor relations team and holds investor briefings regularly, embodying good transparency and disclosure practices.
ESG Rating History
[Chart data from Jul-23 to Jul-25 showing a consistent ESG rating of 2.6 is available in the original document]
Source: RHB
Financial Exhibits
Valuation basis
We apply a 12x 2026F P/E. Our TP implies an EV/ha of USD12,000/ha, in line with the peers’ range of USD10,000-15,000/ha.
Key drivers
- CPO price movement;
- FFB production output;
- Competitiveness of its downstream processing division vs peers.
Key risks
- CPO price movement;
- Weather risks;
- Demand and supply dynamics of the global vegetable oil industry.
Company Profile
TSH Resources is involved in oil palm plantations in Sabah and Indonesia. It also has a 50% stake in a joint venture refinery with Wilmar International.
Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
---|---|---|---|---|---|
Total turnover | 1,067 | 1,020 | 1,055 | 1,049 | 1,074 |
Gross profit | 398 | 403 | 401 | 363 | 374 |
EBITDA | 301 | 293 | 367 | 335 | 362 |
Depreciation and amortisation | (101) | (128) | (144) | (148) | (152) |
Operating profit | 200 | 165 | 223 | 188 | 210 |
Net interest | (7) | 0 | 2 | 12 | 22 |
Pre-tax profit | 211 | 182 | 257 | 230 | 264 |
Taxation | (72) | (57) | (62) | (55) | (63) |
Reported net profit | 108 | 101 | 157 | 142 | 163 |
Recurring net profit | 86 | 151 | 157 | 142 | 163 |
Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
---|---|---|---|---|---|
Change in working capital | 24 | (33) | (34) | 0 | (2) |
Cash flow from operations | 227 | 240 | 273 | 292 | 319 |
Capex | (93) | (100) | (87) | (86) | (88) |
Cash flow from investing activities | (36) | (67) | (62) | (61) | (63) |
Dividends paid | (35) | (69) | (28) | (28) | (28) |
Cash flow from financing activities | (328) | (149) | (129) | (129) | (129) |
Cash at beginning of period | 376 | 250 | 263 | 346 | 447 |
Net change in cash | (138) | 25 | 82 | 102 | 127 |
Ending balance cash | 250 | 261 | 346 | 447 | 575 |
Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
---|---|---|---|---|---|
Total cash and equivalents | 250 | 263 | 346 | 447 | 575 |
Tangible fixed assets | 1,897 | 1,953 | 1,899 | 1,841 | 1,780 |
Total investments | 210 | 261 | 268 | 274 | 281 |
Total assets | 2,845 | 2,748 | 2,809 | 2,864 | 2,941 |
Short-term debt | 192 | 201 | 104 | 6 | (92) |
Total long-term debt | 112 | 59 | 59 | 59 | 59 |
Total liabilities | 540 | 482 | 376 | 282 | 187 |
Total equity | 2,305 | 2,266 | 2,434 | 2,581 | 2,754 |
Total liabilities & equity | 2,845 | 2,748 | 2,809 | 2,864 | 2,941 |
Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
---|---|---|---|---|---|
Revenue growth (%) | (18.3) | (4.4) | 3.4 | (0.6) | 2.4 |
Recurrent EPS growth (%) | (54.8) | 76.1 | 4.0 | (9.8) | 14.8 |
Gross margin (%) | 37.4 | 39.5 | 38.0 | 34.6 | 34.8 |
Operating EBITDA margin (%) | 28.2 | 28.7 | 34.7 | 32.0 | 33.7 |
Net profit margin (%) | 10.1 | 9.9 | 14.9 | 13.5 | 15.1 |
Dividend payout ratio (%) | 31.9 | 0.0 | 17.6 | 19.5 | 17.0 |
Capex/sales (%) | 8.8 | 9.8 | 8.2 | 8.2 | 8.2 |
Interest cover (x) | 9.93 | 13.08 | 19.69 | 42.63 | (83.09) |
Source: Company data, RHB
Figure 1: TSH’s progress on ESG factors
2022 | 2023 | 2024 | ||
---|---|---|---|---|
ENVIRONMENT | ||||
GHG emissions | Emissions (tCO2e) | 294,187 | 269,011 | 242,949 |
GHG emissions | Intensity (tCO2e per tonne of palm product) | 1.2 | 1.16 | 1.22 |
Waste treatment | Recycling/Repurposing of waste | Yes | Yes | Yes |
Energy efficiency (water) | Water usage (m3) and intensity (m3/tonne of palm product) | 1,386,137.00 | 1,037,856.00 | 3,012,000.00* |
Energy efficiency | Energy consumption and intensity | Not disclosed | 156,370 | 187,649 |
Certifications | RSPO/MSPO/ISPO certified (%) | RSPO: 44% estates, 67% mills MSPO: 100% ISPO: 36% for Indonesia companies |
RSPO: 44% estates, 60% mills MSPO: 100% ISPO: 36% for Indonesia companies |
RSPO: N/A** MSPO: 100% ISPO: 55% for Indonesia companies |
Use of peat land | Peat land (%) | Not disclosed | Not disclosed | Not disclosed |
Fire accidents | Number of accidents | Not disclosed | Not disclosed | Not disclosed |
Usage of renewable energy | % of renewable energy used | Not disclosed | 91.7% | 73.7% |
Traceability | Traceable to mills (%) | Not disclosed | Not disclosed | Yes |
Traceability | Traceable to plantation (%) | Not disclosed | 84.00% | 98.00% |
SOCIAL | ||||
Channels for workers to raise concerns | Existence of grievance channels to raise concerns | Yes | Yes | Yes |
Whistleblowing policy | Policies to protect whistleblowers | Yes | Yes | Yes |
Employees’ professional/personal development | Provision of training and education | Yes | Yes | Yes |
Policy for smallholders | Policy in place for training, yield improvement and RSPO certification | Yes | Yes | Yes |
Employees’ welfare | Accommodation and amenities provided | Yes | Yes | Yes |
GOVERNANCE | ||||
Board composition | At least half of the board being independent directors | 6/10 are independent | 5/9 are independent | 4/8 are independent |
Limiting to nine years (for independent directors) | Limitation of tenure to nine years (for independent directors) | Yes | Yes | Yes |
Gender inclusivity | Female representation in the board | 20.0% | 11.1% | 12.5% |
Emphasis of sustainability at board level | Formation of a sustainability group | Yes | Yes | Yes |
Remuneration transparency | Full disclosure of fees and benefits on named basis | No | No | No |
Note: *The sharp increase was due to change in methodology
Note 2: **TSH withdrew from RSPO membership in FY24
Source: Company data, RHB
Figure 2: Key assumptions
FY23 | FY24 | FY25F | FY26F | FY27F | |
---|---|---|---|---|---|
FFB produced, tonnes | 905,437 | 795,002 | 841,378 | 882,753 | 916,377 |
% change | -2.0% | -12.2% | 5.8% | 4.9% | 3.8% |
Percentage of production from Indonesia | 93.2% | 91.7% | 91.9% | 91.3% | 91.3% |
CPO price assumption (Malaysia), MYR/tonne | 3,822 | 4,192 | 4,100 | 4,000 | 4,000 |
Source: Company data, RHB
Recommendation Chart
[Chart data from Jul-20 to Jan-25 is available in the original document]
Source: RHB, Bloomberg
Date | Recommendation | Target Price | Price |
---|---|---|---|
2025-05-20 | Neutral | 1.15 | 1.11 |
2025-02-28 | Neutral | 1.20 | 1.19 |
2024-11-21 | Neutral | 1.10 | 1.17 |
2024-11-11 | Neutral | 1.20 | 1.18 |
2024-08-23 | Neutral | 1.10 | 1.14 |
2022-02-25 | Neutral | 1.40 | 1.39 |
2022-02-21 | Neutral | 1.35 | 1.35 |
2021-06-22 | Buy | 1.20 | 1.06 |
2021-05-19 | Neutral | 1.30 | 1.20 |
2021-04-21 | Buy | 1.30 | 1.06 |
2021-02-26 | Buy | 1.30 | 1.06 |
2021-02-26 | Buy | na | 1.06 |
2021-01-19 | Buy | 1.25 | 1.08 |
2020-11-18 | Buy | 1.25 | 1.10 |
2020-11-01 | Buy | 1.25 | 0.94 |
Source: RHB, Bloomberg
RHB Guide to Investment Ratings
Buy: Share price may exceed 10% over the next 12 months
Trading Buy: Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain
Neutral: Share price may fall within the range of +/- 10% over the next 12 months
Take Profit: Target price has been attained. Look to accumulate at lower levels
Sell: Share price may fall by more than 10% over the next 12 months
Not Rated: Stock is not within regular research coverage
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