Earnings of Malaysian planters will moderate but margins remain healthy

ANOTHER good set of plantation results can be expected for the coming April-June or 2Q 2023 season with ‘easier-yet-resilient earnings’ thereafter on crude palm oil (CPO) price forecast of RM4,500/metric tonne (MT) for 2023 and RM4,000/MT for 2023.

With production cost of between RM2,000/MT to 2,500/MT, Kenanga Research reckoned that margins for the sector are still relatively healthy.

‘With CPO prices probably having peaked, the appeal of the plantation sector is more about resilience and defensiveness at this juncture, especially as the economic outlook is unclear and the sector is among the beneficiary of food and energy inflation,’ justified analyst Teh Kian Yeong in a plantation sector update.