KUALA LUMPUR (Nov 22): SD Guthrie Bhd (KL:SDG), formerly known as Sime Darby Plantation Bhd, is expected to post flattish net profit growth for the fourth quarter of 2024 (4Q2024), attributed to slower recovery in fresh fruit bunch (FFB) production at its Indonesian estates, said analysts.

CIMB Securities on a Friday note said that for 4Q2024, FFB output is expected to recover slightly in Indonesia after a 20% decline in 9M2024 due to the lagged effect of El Niño.

SD Guthrie’s Papua New Guinea operations are also set to stabilise following heavy rainfall earlier this year, analysts said.

While the group expects a recovery in production for 4Q2024, Cimb Securities expects production "to remain below year-ago levels".

Nevertheless, higher CPO prices could help offset this production shortfall, it added.

In a separate note, Hong Leong Investment Bank (HLIB) said its downward revision in SD Guthrie’s FFB output assumption is likely to more than offset an upward revision in its CPO price assumption.

As a result, HLIB reduced SD Guthrie’s FY2024 core net profit forecast by 7.4% to RM 1.31 billion.

For its FY2025-FY2026 core net profit forecasts, however, HLIB raised these by 14.3% and 4.7%, respectively, to account for higher CPO price assumption in FY2025 and higher FFB output assumption in FY2024-FY2025.

In 4Q2024, SD Guthrie is expecting better downstream margins driven by improved performance in the Asia-Pacific region.

Additionally, SD Guthrie will also introduce new segments in its 4Q2024 financials to reflect its diversification into the renewable energy and industrial development segments.

CIMB reiterated a “buy” call on SD Guthrie with an unchanged target price of RM5.50, while HLIB maintained a “hold” call on the stock with a higher target price of RM5.09 from RM4.46 previously.

Looking ahead, SD Guthrie is planning to expand its recurring earnings base through industrial land development and renewable energy ventures, which is expected to gain momentum by mid-2025.