KUALA LUMPUR (July 27): Hap Seng Plantations Holdings Bhd (KL:HSPLANT) is set for an earnings jump this year as output and prices of palm oil surge, according to its most bullish analyst.

Fresh-fruit bunches production could grow as much as 17% this year, the strongest among Malaysian planters, according to CGS International. The firm also had secured 2026’s fertiliser needs that cost only up to 10% more compared to its peers that may face a 25% increase, the research house noted.

The firm may also benefit from priority access to supplies through its parent company Hap Seng Consolidated Bhd (KL:HAPSENG), which operates a fertiliser trading business, the house said.

CGS International maintained its ‘add’ call on Hap Seng Plantations and target price of RM3.35, the highest among 11 research houses tracked by Bloomberg, which also implies potential upside of 37% from its last price of RM2.44.

Shares of Hap Seng Plantations have risen some 16% year to date, tracking the gains in prices of palm oil, as geopolitical conflicts in the Middle East spur demand for biodiesel as a cheaper alternative fuel source to petroleum oil.

The consensus is also bullish on Hap Seng Plantations, with nine ‘buy’, two ‘hold’ and no ‘sell’ calls.

This year, Hap Seng Plantations may report earnings of RM206 million, or a 43% jump on a per-share basis, according to CGS International’s estimates.

The stock is also the cheapest among Malaysian plantation stocks covered, said CGS International. At below 10 times its forward earnings, Hap Seng Plantations is currently attractive given its strong dividend yields of 6%, the house noted.