Genting Plantations 2Q net 192.6M ringgit vs. 85.1M ringgit y/y

Genting Plantations 2Q net 192.6M ringgit vs. 85.1M ringgit y/y

PETALING JAYA: Genting Plantations Bhd's earnings for the second quarter of 2025 (2Q25) are expected to come in weaker than anticipated, according to UOB Kay Hian Research (UOBKH Research). The research house predicts that the oil palm plantation group's core net profit for 2Q25 will fall by between 25% and 30% quarter-on-quarter (q-o-q), resulting in a net profit of between RM90mil and RM100mil. This represents a significant decline from the RM133mil recorded in the first quarter of 2025 (1Q25) [1].

The primary factors contributing to this expected decline are softer average selling prices and increased fertilizer usage. UOBKH Research noted that weak crude palm oil and palm kernel spot prices were observed over the 2Q25 period. Additionally, the group is expected to play catch-up on its fertilizer usage, which was low in 1Q25 at 11% of its target. This sequential increase in unit production costs is anticipated to offset the fall in net profit [1].

However, the research house expects a partial cushioning effect from a stronger production output, with fresh fruit bunch volumes projected to increase by about 15% in 2Q25. Despite this, the overall impact is likely to be significant, given the broader economic conditions affecting the palm oil sector [1].

UOBKH Research has maintained a "hold" rating on the stock and kept its target price at RM4.70 based on a price-earnings ratio of 12 times for this year, which is slightly below the stock's five-year average.

References:
[1] https://www.thestar.com.my/business/business-news/2025/08/21/genting-plantations-likely-to-be-affected-by-softer-prices