KUALA LUMPUR (July 11): IOI Corporation Bhd (KL:IOICORP) is expected to see an 11% quarter-on-quarter increase in net profit in the final three months of its financial year supported by a sharp rise in plantation output, said UOB Kay Hian.

Net profit for the quarter ended June 30, 2025 (4QFY2025) will likely come in at RM310 million, according to UOB Kay Hian in its results preview. Further, IOI Corp’s actual selling prices may be higher than spot prices due to its tendency to sell forward significant volume of its near-term output, the research house said.

“In addition, the downstream profit contribution is expected to pick up further following the positive inflection in margins seen last quarter,” the house added.

Prices of the edible oil used in everything from lipstick to diesel have rebounded from their lows in May, but averaged RM3,935 per tonne in April-June, lower than RM4,416 per tonne over January-March.

Oil palm is sensitive to rain and sunshine conditions, and output of palm oil has dipped industry-wide from unfavourable weather conditions and floods in several key producing states in recent months.

The latest production trend suggests that IOI Corp is “shrugging off production disappointments seen in the previous months”, UOB Kay Hian noted.

Overall, IOI Corp may end the financial year with a 12-month net profit of RM1.31 billion, a tad higher than the consensus estimate of RM1.26 billion, according to UOB Kay Hian’s estimates.

For FY2026, net income will likely grow marginally to RM1.32 billion, as higher plantation output and continued downstream segment earnings recovery, led by IOI Corp's refining operations as well as specialty fats profit contribution, will offset the lower projected palm oil prices, the house noted.

UOB Kay Hian raised its target price for IOI Corp to RM3.60 from RM3.55, but kept the stock on ‘hold’ as its current valuation appears fair amid consolidating palm oil prices.