KUALA LUMPUR (Feb 4): SD Guthrie Bhd's (KL:SDG) recent acquisition of a 48% stake in Netherlands-based Marvesa Supply Chain Services BV, a Dutch firm specialising in animal nutrition additives, is expected to bolster SD Guthrie's presence in the European oils and fats market, analysts said.

While the unexpected move is seen as aligning with SD Guthrie's broader objectives to enhance its footprint in Europe and diversify its product offerings, analysts are cautiously optimistic due to lack of earnings details, as well as clarity on the synergy of the acquisition.

Kenanga Research, while recognising the strategic alignment of the acquisition with SD Guthrie’s European downstream operations, expects minimal short-term impact on the company's earnings.  

Investors should monitor how the integration of Marvesa unfolds in the coming months, said Kenanga. The research house believes SD Guthrie is investing in Marvesa because traceability is increasingly important among international buyers of oils and fats.

Marvesa’s expertise in handling, tracking and tracing food-related products, including the process to obtain regulatory approvals, securing certifications/permits as well as having ready and appropriate infrastructure will prove invaluable to SD Guthrie, it said in a note on Tuesday, in which it maintained its 'market perform' call on the stock with a target price of RM4.60.

Separately, PublicInvest Research noted that while the deal offers substantial growth potential, particularly within non-palm sectors, there is insufficient financial information to assess its immediate impact on SD Guthrie’s overall earnings.

The acquisition opens new avenues for SD Guthrie to promote its certified sustainable palm oil products, which make up 12% of the global supply, it said.

PublicInvest maintains a "neutral" rating for SD Guthrie, with an unchanged target price of RM4.85, due to the lack of financial information such as earnings and profitability of this company.

In a separate note, MIDF Research, which maintained a "buy" call on the stock, with a target price of RM5.43, was more positive on the unexpected acquisition.  

Despite concerns in the industry regarding the European Union’s upcoming European Union Deforestation Regulation, MIDF views the investment as a strategic move to fuel SD Guthrie's growth in the downstream sector.  

The acquisition enhances opportunities for cross-border trading between Europe and the Asia Pacific region, MIDF said, adding that SD Guthrie’s continued expansion in the European Union is critical to its growth strategy.

The timing of the acquisition coincides with the anticipation of SD Guthrie’s fourth-quarter results for FY2024, which are expected to be released on Feb 27, 2025. Market expectations point to stronger financial performance, driven in part by rising crude palm oil prices.

SD Guthrie’s shares settled six sen or 1.24% higher at RM4.91, valuing the company at RM33.96 billion.

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