TSH Resources Malaysia Company Update






TSH Resources Malaysia Company Update


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.

Emissions (tCO2e)
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

  1. CPO price movement;
  2. FFB production output;
  3. Competitiveness of its downstream processing division vs peers.

Key risks

  1. CPO price movement;
  2. Weather risks;
  3. 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.

Income statement (MYRm)
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
Cash flow (MYRm)
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
Balance sheet (MYRm)
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
Key metrics
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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[… full disclaimer text from page 6, 7 continues here …]

The research analysts responsible for the production of this report hereby certifies that the views expressed herein accurately and exclusively reflect his or her personal views and opinions about any and all of the issuers or securities analysed in this report and were prepared independently and autonomously. The research analysts that authored this report are precluded by RHB in all circumstances from trading in the securities or other financial instruments referenced in the report, or from having an interest in the company(ies) that they cover.

RESTRICTIONS ON DISTRIBUTION

Malaysia

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DISCLOSURE OF CONFLICTS OF INTEREST

[… full disclosure text from page 7 …]

Analyst Certification

The analyst(s) who prepared this report, and their associates hereby, certify that:
(1) they do not have any financial interest in the securities or other capital market products of the subject companies mentioned in this report, except for:

Analyst Company
   

(2) no part of his or her compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.

Contact Information

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Malaysia
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See important disclosures at the end of this report


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