SD Guthrie (SDG MK)Strong Showing For 2Q25, More To Come In 2H25; BUY
Agriculture | Agriculture
| Target Price (Return): | MYR6.10 (+28%) |
| Price (Market Cap): | MYR4.77 (USD7,804m) |
| ESG score: | 3.2 (out of 4) |
| Avg Daily Turnover (MYR/USD) | 12.0m/2.82m |
Analysts
Hoe Lee Leng
+603 2302 8110
hoe.lee.leng@rhbgroup.com
Iftaar Hakim Rusli
+603 2302 8114
iftaar.hakim.rusli@rhbgroup.com
Share Performance (%)
| YTD | 1m | 3m | 6m | 12m | |
|---|---|---|---|---|---|
| Absolute | (3.6) | 0.0 | 1.9 | (2.9) | 7.2 |
| Relative | 2.6 | (0.3) | 2.5 | 0.2 | 10.4 |
52-wk Price low/high (MYR) 4.40 – 5.15
- Still BUY, with new MYR6.10 TP from MYR5.45, 28% upside and c.3% FY26F yield. 1H25 earnings beat. Despite ASPs likely to moderate in 2H, output should improve, with SD Guthrie potentially recognising MYR500-700m from land sale gains by year-end. Valuation is attractive – trading at 19.6x 2026F P/E, ie at the mid-end of its peer range of 17-22x.
- 2Q25 core earnings beat expectations, surging 24% YoY (-8% QoQ), resulting in 1H25 core profit accounting for 62-70% of our and Street FY25F. This was from lower-than-expected interest costs, higher-than-expected CPO ASP in Malaysia (due to forward sales) and Papua New Guinea (PNG) and stronger-than-expected downstream margins. SDG declared an interim DPS of 7.8 sen, representing a 50% payout.
- SDG recorded CPO ASP of MYR4,146/tonne in 2Q25 (with Malaysia coming in at MYR4,232 (4% above the Malaysian Palm Oil Board (MPOB) average) and PNG at a much higher MYR4,494/tonne (10% above MPOB). SDG has sold about 100% of its Aug 2025 output and 20% of its Sep-Dec 2025 Peninsular output at MYR4,100/tonne. We adjust our PNG price premium accordingly.
- 2Q25 FFB output rose 14% QoQ (+4.2% YoY), bringing 1H25 output to +2.7% YoY, slightly below our estimates of +4.6% for FY25. Going forward, although SDG has started to see a strong pickup in output in Malaysia and PNG, it has moderated its FFB growth target to 3-5% for FY25 (from mid- to high-single digit growth) due to potential weakness in Indonesia’s output. We keep our FY25F growth at +4.6% and FY26F-27F at 2-3%.
- 2Q25 unit costs fell 5.6% QoQ to MYR2,445 in 2Q25, due to improving FFB output and lower fertiliser application. SDG is behind on its fertiliser application for 1H25, having applied 68% of its 1H25 requirements for MY, 77% for IND and 84% for PNG. Going forward, SDG expects its fertiliser costs in 2H to be similar to 1H25 (c.7-8% lower YoY), which would translate to FY25 unit costs of c.MYR2,500/tonne (-3% YoY) – in line with our forecasts.
- Maintain BUY, with new SOP-based MYR6.10 TP (from MYR5.45), after raising earnings by 21.8%, 15.1% and 15.5% for FY25F-27F, coming from higher ASP premiums for PNG, lower interest rates and higher downstream margins. Valuation remains attractive, at 19.6x 2026F P/E, vs peers’ 17-22x.
- ESG. Our TP incorporates a 4% ESG premium.
SDG MK (SDG MK) Price Chart
A line chart showing the price close of SDG MK and its relative performance to FBM KLCI from Aug-24 to Jul-25.
Source: Bloomberg
Forecasts and Valuation
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
|---|---|---|---|---|---|
| Total turnover (MYRm) | 18,428 | 19,831 | 16,416 | 17,033 | 18,440 |
| Recurring net profit (MYRm) | 995 | 2,201 | 1,816 | 1,683 | 1,739 |
| Recurring net profit growth (%) | (53.5) | 121.2 | (17.5) | (7.3) | 3.3 |
| Recurring P/E (x) | 33.15 | 14.99 | 18.17 | 19.60 | 18.97 |
| P/B (x) | 1.9 | 1.8 | 1.7 | 1.6 | 1.5 |
| P/CF (x) | 10.73 | 11.97 | 8.00 | 9.69 | 9.65 |
| Dividend Yield (%) | 3.1 | 3.4 | 2.3 | 2.5 | 2.5 |
| EV/EBITDA (x) | 11.25 | 8.00 | 8.47 | 8.75 | 8.46 |
| Return on average equity (%) | 10.9 | 12.0 | 9.5 | 8.4 | 8.3 |
| Net debt to equity (%) | 24.5 | 23.7 | 18.1 | 16.9 | 15.8 |
Source: Company data, RHB
E Score: 3.3 (EXCELLENT)
S Score: 3.0 (GOOD)
G Score: 3.0 (GOOD)
Please refer to the ESG analysis on the next page
Emissions And ESG
Trend analysis
In FY24, Scope 1 emissions decreased to 9.4m tonnes of CO2 equivalents (-8% YoY) (FY23: 10.25m tonnes of CO2 equivalents) while Scope 2 increased to 187.7k tonnes of CO2 equivalents (FY23: 167.7k tonnes of CO2 equivalents). Scope 3 on the other hand, marginally decreased by 1% to 9.03m tonnes of CO2 equivalents (FY23: 9.13m tonnes of CO2 equivalents).
| Emissions (tCO2e) | Dec-22 | Dec-23 | Dec-24 | Dec-25 |
|---|---|---|---|---|
| Scope 1 | 9,742,966 | 10,245,293 | 9,398,397 | na |
| Scope 2 | 164,201 | 167,688 | 187,678 | na |
| Scope 3 | 8,961,121 | 9,128,227 | 9,031,799 | na |
| Total emissions | 18,868,288 | 19,541,208 | 18,617,874 | na |
Source: Company data, RHB
Latest ESG-Related Developments
Achieving Net Zero: SDG has developed a three-pronged approach to achieve its Net Zero Emission target by 2050 i.e. i) accelerating renewables programme ii) land use transformation; iii) enhancing supplier engagements.
Traceability: in 2024, SDG managed to achieve 84.9% traceability to plantation.
Sustainability certifications: in 2024, 100% of SDG’s upstream operations are RSPO certified.
ESG Unbundled
Overall ESG Score: 3.2 (out of 4)
Last Updated: 2 July 2025
E Score: 3.3 (EXCELLENT)
SDG has recorded a 21% decrease in GHG emissions intensity in 2024 as compared to 2023. It maintains its target to reduce its GHG emission by 50% by 2030 against 2020 baseline.
S Score: 3.0 (GOOD)
U.S. CBP has lifted the two-year ban on palm oil products for SDG on forced labour allegations. SDG continues to adhere to the International Labour Organisations Conventions and Free and Fair Labour Principles for all its employees.
G Score: 3.0 (GOOD)
50% of SDG’s board members are independent. Additionally, SDG provides full disclosure on director remuneration, which includes salaries and bonuses and on named basis. SDG has an in-house investor relations team and holds investor briefings regularly, embodying good transparency and disclosure practices.
ESG Rating History
ESG Rating History Chart
A bar chart showing ESG ratings from Aug-23 to Aug-25. The rating was 2.8 in Aug-23, then 3.0 consistently until Apr-25, and increased to 3.2 by Aug-25.
Source: RHB
Financial Exhibits
Valuation basis
SOP, applying 20x 2026F P/E to its plantation earnings, 18x P/E for its downstream division and RNAV for its property landbank.
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
SD Guthrie is the largest listed plantations company on Bursa Malaysia, with more than 600,000ha of oil palm landbank.
Financial summary (MYR)
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
|---|---|---|---|---|---|
| Recurring EPS | 0.14 | 0.32 | 0.26 | 0.24 | 0.25 |
| DPS | 0.15 | 0.16 | 0.11 | 0.12 | 0.12 |
| BVPS | 2.57 | 2.67 | 2.83 | 2.95 | 3.08 |
| Return on average equity (%) | 10.9 | 12.0 | 9.5 | 8.4 | 8.3 |
Valuation metrics
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
|---|---|---|---|---|---|
| Recurring P/E (x) | 33.15 | 14.99 | 18.17 | 19.60 | 18.97 |
| P/B (x) | 1.9 | 1.8 | 1.7 | 1.6 | 1.5 |
| FCF Yield (%) | 3.0 | 2.4 | 4.9 | 2.7 | 2.8 |
| Dividend Yield (%) | 3.1 | 3.4 | 2.3 | 2.5 | 2.5 |
| EV/EBITDA (x) | 11.25 | 8.00 | 8.47 | 8.75 | 8.46 |
| EV/EBIT (x) | 19.59 | 11.54 | 13.31 | 14.39 | 13.94 |
Income statement (MYRm)
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
|---|---|---|---|---|---|
| Total turnover | 18,428 | 19,831 | 16,416 | 17,033 | 18,440 |
| Gross profit | 9,030 | 9,717 | 8,044 | 8,346 | 9,035 |
| EBITDA | 3,362 | 4,733 | 4,374 | 4,229 | 4,370 |
| Depreciation and amortisation | (1,432) | (1,453) | (1,591) | (1,657) | (1,718) |
| Operating profit | 1,930 | 3,280 | 2,784 | 2,572 | 2,652 |
| Net interest | (175) | (119) | (76) | (53) | (50) |
| Pre-tax profit | 2,752 | 3,150 | 2,635 | 2,439 | 2,514 |
| Taxation | (719) | (796) | (646) | (585) | (603) |
| Reported net profit | 1,860 | 2,175 | 1,816 | 1,683 | 1,739 |
| Recurring net profit | 995 | 2,201 | 1,816 | 1,683 | 1,739 |
Cash flow (MYRm)
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
|---|---|---|---|---|---|
| Change in working capital | 723 | (645) | 541 | (107) | (209) |
| Cash flow from operations | 3,075 | 2,757 | 4,121 | 3,403 | 3,419 |
| Capex | (2,096) | (1,968) | (2,500) | (2,500) | (2,500) |
| Cash flow from investing activities | (630) | (1,280) | (2,500) | (2,500) | (2,500) |
| Dividends paid | (642) | (1,134) | 0 | 0 | 0 |
| Cash flow from financing activities | (2,244) | (1,685) | (1,161) | (830) | (830) |
| Cash at beginning of period | 635 | 830 | 625 | 1,085 | 1,159 |
| Net change in cash | 201 | (208) | 460 | 73 | 89 |
| Ending balance cash | 830 | 625 | 1,088 | 1,162 | 1,251 |
Balance sheet (MYRm)
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
|---|---|---|---|---|---|
| Total cash and equivalents | 830 | 625 | 1,085 | 1,159 | 1,248 |
| Tangible fixed assets | 19,145 | 19,365 | 20,274 | 21,117 | 21,899 |
| Total investments | 60 | 60 | 60 | 60 | 60 |
| Total assets | 31,886 | 32,047 | 32,218 | 33,411 | 34,692 |
| Short-term debt | 1,701 | 1,742 | 1,742 | 1,742 | 1,742 |
| Total long-term debt | 3,582 | 3,360 | 2,960 | 2,960 | 2,960 |
| Total liabilities | 13,711 | 13,117 | 12,184 | 12,477 | 12,801 |
| Total equity | 18,175 | 18,930 | 20,035 | 20,934 | 21,891 |
| Total liabilities & equity | 31,886 | 32,047 | 32,218 | 33,411 | 34,692 |
Key metrics
| Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F | |
|---|---|---|---|---|---|
| Revenue growth (%) | (12.4) | 7.6 | (17.2) | 3.8 | 8.3 |
| Recurrent EPS growth (%) | (53.5) | 121.2 | (17.5) | (7.3) | 3.3 |
| Gross margin (%) | 49.0 | 49.0 | 49.0 | 49.0 | 49.0 |
| Operating EBITDA margin (%) | 18.2 | 23.9 | 26.6 | 24.8 | 23.7 |
| Net profit margin (%) | 10.1 | 11.0 | 11.1 | 9.9 | 9.4 |
| Dividend payout ratio (%) | 55.8 | 52.0 | 41.9 | 49.3 | 47.7 |
| Capex/sales (%) | 11.4 | 9.9 | 15.2 | 14.7 | 13.6 |
| Interest cover (x) | 9.77 | 22.63 | 27.40 | 26.36 | 27.17 |
Source: Company data, RHB
Other highlights
Downstream margin improved to 2.9% in 2Q25 (1Q25: 1.8%), coming from stronger volumes from differentiated products in Asia and lower costs in EU; offset by a decline in volumes and margins in EU and losses from bulk products in Asia. 1H25’s PBIT margin however, fell to 2.3% (from 4.2% in 1H24), due to margin compressions in Europe, amid weaker demand. Going forward, SDG expects 2H25 margin to be flattish HoH.
First land sale gain of MYR500-700m by year-end from the sale and purchase agreement with Eco World Development Group (ECW MK, BUY, TP: MYR3) for 1,195 acres of land in its Bukit Pelandok estate. For the remaining MoUs, however, the disposal gains would only be recognised from 2026F onwards.
Figure 1: SDG’s results review
| FYE Dec (MYRm) | 2Q24 | 1Q25 | 2Q25 | QoQ (%) | YoY (%) | 1H24 | 1H25 | YoY (%) | Comments |
|---|---|---|---|---|---|---|---|---|---|
| Turnover | 4,965.0 | 4,817.0 | 5,169.0 | 7 | 4 | 9,307.0 | 9,986.0 | 7 | Stronger FFB output (+3% YoY), CPO (+10% YoY) and PK ASPs (+60% YoY) |
| EBIT | 611.0 | 809.0 | 802.0 | (1) | 31 | 1,010.0 | 1,611.0 | 60 | See Figure 2 |
| Margin (%) | 12.3 | 16.8 | 15.5 | 10.9 | 16.1 | ||||
| Investment and interest income | 6.0 | 6.0 | 5.0 | (17) | (17) | 13.0 | 11.0 | (15) | |
| interest expense | (40.0) | (25.0) | (26.0) | (4) | 35 | (77.0) | (51.0) | 34 | |
| Associates | 2.0 | (1.0) | 5.0 | 2.0 | 4.0 | 100 | |||
| Joint Ventures | 7.0 | (7.0) | (3.0) | (7.0) | (10.0) | (43) | |||
| EI | 9.0 | 17.0 | – | n.m | n.m | – | 17.0 | n.m | Mainly from gain on disposals of PPE (MYR82m), but offset by forex losses (-MYR15m) and FV losses on biological assets (-MYR26m) |
| Pretax profit | 595.0 | 799.0 | 783.0 | (2) | 32 | 941.0 | 1,582.0 | 68 | Flow-through from EBIT and EI gain |
| PBT margin (%) | 12.0 | 16.6 | 15.1 | 10.1 | 15.8 | ||||
| Taxation | (136.0) | (183.0) | (234.0) | (28) | (72) | (229.0) | (417.0) | (82) | |
| Eff. rate (%) | 22.9 | 22.9 | 29.9 | 24.3 | 26.4 | ||||
| Minorities | (13.0) | (18.0) | (13.0) | 28 | – | (24.0) | (31.0) | (29) | |
| Perpetual sukuk | (31.0) | (31.0) | (31.0) | (62.0) | (62.0) | ||||
| Net profit | 415.0 | 567.0 | 505.0 | (11) | 22 | 626.0 | 1,072.0 | 71 | |
| Net Profit (ex-EI) | 406.0 | 550.0 | 505.0 | (8) | 24 | 626.0 | 1,055.0 | 69 | At 62-71% of our and consensus full year estimates |
| Net Profit margin (%) | 8.4 | 11.8 | 9.8 | 6.7 | 10.7 | ||||
| EPS (sen) | 6.0 | 8.2 | 7.3 | (11) | 22 | 9.1 | 15.5 | 70 | |
| DPS (sen) | 4.7 | 7.8 | 4.7 | 7.8 | 67 |
Source: Company data, RHB
Segmental breakdown
Figure 2: Segmental breakdown
| FYE Dec (MYRm) | 2Q24 | 1Q25 | 2Q25 | QoQ (%) | YoY (%) | 1H24 | 1H25 | YoY (%) | Comments |
|---|---|---|---|---|---|---|---|---|---|
| Upstream Malaysia (ex-intersegment sales) | 289.0 | 199.0 | 295.0 | 48 | 2 | 462.0 | 494.0 | 7 | Higher CPO (+9% YoY) and PK ASPs (+56% YoY), but offset by weaker output (-2% YoY) |
| Upstream Indonesia (ex-intersegment sales) | 259.0 | 335.0 | 354.0 | 6 | 37 | 465.0 | 689.0 | 48 | On the back of stronger FFB output (+10% YoY), and robust CPO (+5% YoY) and PK ASPs (+73% YoY) |
| Upstream Papua New Guinea (ex-intersegment sales) | 111.0 | 59.0 | 81.0 | 37 | (27) | 172.0 | 140.0 | (19) | Including inter-segment sales, 1H25 sales improved 16.5% YoY thanks to higher FFB output (+7% YoY) and CPO ASPs (+16% YoY) |
| Downstream | 4,281.0 | 4,208.0 | 4,419.0 | 5 | 3 | 8,151.0 | 8,627.0 | 6 | |
| Renewable energy | – | ||||||||
| Other operations | 25.0 | 16.0 | 20.0 | 25 | (20) | 57.0 | 36.0 | (37) | |
| Total | 4,965.0 | 4,817.0 | 5,169.0 | 7 | 4 | 9,307.0 | 9,986.0 | 7 | |
| EBIT breakdown | |||||||||
| Upstream Malaysia | 206.0 | 285.0 | 294.0 | 3 | 43 | 324.0 | 579.0 | 79 | Higher margins on the back of higher CPO and PK ASPs |
| Upstream Indonesia | 107.0 | 209.0 | 165.0 | (21) | 54 | 191.0 | 374.0 | 96 | |
| Upstream Papua New Guinea | 111.0 | 259.0 | 201.0 | (22) | 81 | 174.0 | 460.0 | 164 | |
| Downstream | 225.0 | 76.0 | 126.0 | 66 | (44) | 346.0 | 202.0 | (42) | Margins compression and weaker demand coming from Europe for differentiated market. Similar trend was recorded in Asia-Pacific region, albeit to a lesser extent |
| Renewable energy | -4 | ||||||||
| Other Operations | (37.0) | (16.0) | 16.0 | 200 | (23.0) | – | 100 | ||
| Total (ex-EI) | 611.0 | 809.0 | 802.0 | (1) | 31 | 1,010.0 | 1,611.0 | 60 | |
Source: Company data, RHB
Plantation and Forecast Data
Figure 3: SDG’s plantation statistics
| FYE Dec | 1H24 | 1H25 | YoY (%) |
|---|---|---|---|
| FFB Production (m tonnes) | 4.2 | 4.3 | 3 |
| – Malaysia | 2.2 | 2.2 | -2 |
| – Indonesia | 1.0 | 1.1 | 10 |
| – Papua New Guinea | 0.9 | 1.0 | 7 |
| FFB Yield (tonnes/ha) | 8.7 | 9.1 | 4 |
| – Malaysia | 9.0 | 9.0 | -1 |
| – Indonesia | 7.1 | 7.8 | 11 |
| – Papua New Guinea | 10.9 | 11.9 | 10 |
| CPO Production (m tonnes) | 0.9 | 0.9 | 3 |
| – Malaysia | 0.46 | 0.45 | -2 |
| – Indonesia | 0.2 | 0.2 | 8 |
| – Papua New Guinea | 0.2 | 0.2 | 9 |
| CPO OER (%) | 21.0 | 21.2 | 1 |
| – Malaysia | 20.3 | 20.6 | 1 |
| – Indonesia | 21.4 | 21.1 | -1 |
| – Papua New Guinea | 22.0 | 22.4 | 2 |
| Avg CPO selling price (MYR/tonne) | 3,961 | 4,339 | 10 |
| – Malaysia | 4,068 | 4,423 | 9 |
| – Indonesia | 3,675 | 3,845 | 5 |
| – Papua New Guinea | 4,044 | 4,706 | 16 |
| PK OER (%) | 4.7 | 4.7 | 0 |
| – Malaysia | 4.6 | 4.6 | 0 |
| – Indonesia | 4.2 | 4.1 | -1 |
| – Papua New Guinea | 5.4 | 5.4 | 0 |
| Avg PK selling price (MYR/tonne) | 2,056 | 3,292 | 60 |
| – Malaysia | 2,233 | 3,487 | 56 |
| – Indonesia | 1,687 | 2,917 | 73 |
Source: Company data, RHB
Figure 4: SDG’s forecast assumptions
| FYE | Dec-23 | Dec-24 | Dec-25F | Dec-26F | Dec-27F |
|---|---|---|---|---|---|
| CPO price (MYR/tonne) | 3,772 | 4,101 | 4,300 | 4,100 | 4,100 |
| FFB production (m tonnes) | 8.7 | 8.8 | 9.2 | 9.4 | 9.7 |
| Downstream margin (%) | 3.5 | 3.2 | 3.5 | 3.5 | 3.5 |
Source: RHB
Figure 5: SOP valuation
| Basis | Valuation (MYRm) | |
|---|---|---|
| Plantations upstream | 2026F P/E Target of 20x | 27,459 |
| Plantations downstream | 2026F P/E Target of 18x | 5,587 |
| Property development | 75% Discount to RNAV | 7,634 |
| TOTAL | 40,680 | |
| No. issued shares (m) | 6,916 | |
| SOP/share (MYR) | 5.88 | |
| ESG premium/(discount) | 4% | 0.24 |
| TP (MYR) | 6.12 |
Source: RHB
Recommendation Chart
Recommendation & Target Price Chart
A line chart showing the price close from Aug-20 to Feb-25, with recommendations (Buy, Neutral) marked.
Source: RHB, Bloomberg
| Date | Recommendation | Target Price | Price |
|---|---|---|---|
| 2025-07-08 | Buy | 5.45 | 4.74 |
| 2025-05-07 | Buy | 5.65 | 4.68 |
| 2025-02-28 | Buy | 5.65 | 5.07 |
| 2024-11-21 | Buy | 5.55 | 4.80 |
| 2024-11-11 | Buy | 5.75 | 5.13 |
| 2024-08-22 | Buy | 5.35 | 4.58 |
| 2024-08-12 | Neutral | 4.25 | 4.50 |
| 2024-06-02 | Neutral | 3.90 | 4.25 |
| 2024-02-22 | Neutral | 4.15 | 4.50 |
| 2023-11-26 | Neutral | 4.55 | 4.34 |
| 2023-11-19 | Neutral | 4.35 | 4.38 |
| 2023-08-23 | Neutral | 4.20 | 4.32 |
| 2023-07-23 | Neutral | 4.40 | 4.53 |
| 2023-05-24 | Neutral | 4.00 | 4.41 |
| 2023-02-19 | Neutral | 4.55 | 4.35 |
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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| Analyst | Company |
|---|---|
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