KUALA LUMPUR (April 9): Analysts see Malaysia-focused planters continuing to outperform those with a bigger exposure to Indonesia on the back of a lower levy here, coupled with the weaker rupiah and recent land bank confiscation in the republic.

Plantation stocks have been among the biggest gainers on Bursa Malaysia this year, with sentiment supported by Indonesia’s upcoming B50 mandate rollout in July, further boosted by geopolitical tensions in the Middle East that has lifted energy prices.

But firms with Indonesian plantations have notched weaker earnings in the October-December quarter, with operational challenges faced by this segment expected to persist, analysts said.

While higher crude palm oil (CPO) prices — still up over 14% since the war started — have become the dominant driver, “pure Malaysian plantation players are expected to outperform” their Indonesia-focused peers, Fastmarkets Palm Oil Analytics senior analyst Sathia Varqa told The Edge.

Analysts pointed to Malaysia’s crude palm oil export levy, which stands at 9.5%, lower than Indonesia’s 12.5%. Indonesia recently raised its CPO export levy from 10% as the republic steps up funding for its biodiesel programme.

The Indonesian operations of Malaysian planters could also be affected by a further 4% decline in the Indonesian rupiah against the ringgit since the start of 2026. The currency had weakened 5% in 4Q2025.

Further, recent actions by Indonesian authorities in confiscating lands and imposing fines over non-compliance has added valuation risks that negatively affect those with planted areas in Indonesia, said Sathia.

CIMB Securities analyst Ivy Ng, who also believes planters in Malaysia will outperform players with Indonesian exposure, explained that “whether the Indonesian market remains attractive depends on the pricing of the estates”.

Among those hit by weaker Indonesian operations are MKH Oil Palm (East Kalimantan) Bhd (KL:MKHOP), whose upstream operations are 100% based in Indonesia. Its net profit plunged 70.5% year-on-year (y-o-y) in the quarter ended Dec 31, 2025 to RM9.42 million, as revenue declined 29.3% y-o-y on lower CPO sales volumes and weaker average selling prices.

TSH Resources Bhd (KL:TSH), with about 91% of its landbank sited in Indonesia, also reported weaker earnings, as net profit for 4QFY2025 fell 53% year-on-year.

SD Guthrie Bhd (KL:SDG) likewise saw softer performance in Indonesia, with upstream profit before interest and tax (PBIT) from the republic declining 12% y-o-y in the year ended Dec 31, 2025 (FY2025) in contrast to stronger growth in Malaysia.

Meanwhile, Genting Plantations Bhd (KL:GENP), whose unit paid a fine of RM97 million for alleged non-compliance in forest areas, saw its net profit drop significantly to RM14.14 million for the October-December quarter (4QFY2025) from RM112.05 million a year earlier.

Nonetheless, the CPO rally has lifted most plantation stocks on Bursa Malaysia, with the Bursa Malaysia Plantation Index still up nearly 14% since January and 7.8% in the past month alone.

Top gainers are led by Malaysia-focused planters including Sarawak Oil Palms Bhd (KL:SOP), whose shares are still up 20% despite the recent CPO price pullback, as the two-week truce between Iran and US dragged crude oil prices and dampened sentiment towards potential biodiesel demand.

Meanwhile, Johor Plantations Group Bhd (KL:JPG), with a landbank of 59,783 ha in Johor and Pahang, is trading at RM1.80, still up 18.4% since March, after touching an all-time high of RM1.90 on April 2.

Sarawak-based Ta Ann Holdings Bhd (KL:TAANN) has risen 34% year to date and 20% since March, while Lahad Datu, Sabah-based Hap Seng Plantations Holdings Bhd (KL:HSPLANT) shares are up 9.9% since March.

After touching a 13-month high of RM4,799 per metric ton (MT) last week, CPO futures have retreated to about RM4,557 per tonne at the time of writing, still at a range not seen since April 2025.

The price is still above median analyst forecasts of RM4,400 in the second half of this year and RM4,330 for 2027, according to Bloomberg data

Tighter near-term supply conditions could see CPO prices "remain elevated at RM4,500–RM4,600/MT in 2Q26 before moderating from 3Q2026 onwards,” said Hong Leong Investment Bank (HLIB) Research in its April 2 note.

Support is seen from the finalisation of the US Environmental Protection Agency’s (EPA) Renewable Fuel Standards for 2026–2027, which could lift soybean oil demand and, in turn, support CPO prices through substitution effects, HLIB said.

A potential El Niño event — if it materialises — could weigh on palm productivity, tightening supply and lending further support to prices, it added.

In the energy space, while Indonesia has moved ahead with its B50 biodiesel push, Malaysia’s B20 mandate has yet to be fully implemented nationwide since its rollout began in February 2020.

The Malaysian Biodiesel Association reportedly said the government should accelerate and expand higher biodiesel blends across both transport and industrial sectors.

Progress has been constrained by blending infrastructure readiness, and upgrades are needed to enable nationwide implementation of blends of up to B30, the association added.

However, one risk for the sector is the availability of fertiliser supply, says CIMB Securities’ Ng. Around the world, fertiliser — another product of oil — is squeezed by Middle East-induced shortages. Any constraint could, in turn, continue to weigh on CPO yields, Ng added.