SD Guthrie Bhd is expected to see a decline in core net profit for the second quarter of 2025, as softer crude palm oil (CPO) prices weigh on earnings, according to UOB Kay Hian (UOBKH) Research.
The research firm anticipates the group’s profit to fall by approximately 20% quarter-on-quarter, coming in between RM380 million and RM400 million. This anticipated dip follows a decline in average selling prices of CPO after the first quarter of the year. However, UOBKH notes that the impact is likely to be partially offset by stronger production volumes.
Fresh fruit bunch (FFB) output for April and May rose by 13% and 4% month-on-month respectively, also registering a year-on-year increase of around 5%. The research house highlighted this trend as a clear sign of improving operational performance, following a period of uneven output influenced by weather-related disruptions.
May marked the fourth consecutive month of year-on-year production growth, suggesting that the group is recovering from prior production setbacks driven by the lingering effects of the 2023 El Niño and wet weather experienced in late 2024.
In parallel with its core plantation operations, SD Guthrie is actively pursuing growth in its industrial development and renewable energy verticals. Following a memorandum of understanding signed with EcoWorld Development Group Bhd and NS Corp, the group is moving forward with plans to develop a 1,200-acre industrial park in Negeri Sembilan, projected to carry a gross development value (GDV) of RM2.95 billion.
Additionally, the company has entered into a joint venture with Sime Darby Property Bhd to develop a 2,000-acre industrial and logistics hub on Carey Island, Selangor. These strategic ventures form part of the group’s diversification into high-potential, long-term sectors.
UOBKH Research has revised its earnings forecasts for SD Guthrie for FY25 to FY27 upward by 4% to 5%, largely due to revised assumptions around lower CPO unit costs. These adjustments reflect recent management guidance indicating a more stable cost environment, even in the face of inflationary pressures, including adjustments to the minimum wage.
While maintaining a ‘hold’ call on the counter, the research house set a target price of RM4.75. It noted that although SD Guthrie offers compelling medium-term prospects through favourable production growth and diversification into new business verticals, current valuations appear to reflect the near-term softness in CPO pricing.
-The Star
