KUALA LUMPUR (Aug 19): Johor Plantations Group Bhd (KL:JPG) fell to its lowest in more than a month as the palm oil producer’s second-quarter earnings fell short of expectations.
First-half earnings only accounted for less than one-third of the consensus’ full-year forecasts, prompting at least two research houses to downgrade their recommendations while others slashed their target prices following the stock’s recent rally.
“We feel that recent share price outperformance has run ahead of fundamentals,” Hong Leong Investment Bank said in a note lowering its rating to ‘hold’.
Shares of Johor Plantations Group on Wednesday fell as much as 18 sen or nearly 9% to RM1.89. The stock was trading at RM1.90 at 11.05am as nearly 10 million shares exchanged hands.
Johor Plantations Group is still up by nearly 23% on a year-to-date basis amid rising concern over the El Nino weather pattern. The intensifying heat threatens cut into oil palm fruit yields and shrink supply of the edible oil used in everything from lipstick to soap.
A push for higher blend of palm-based methyl ester in biodiesel on the back of a surge in crude oil prices amid the Middle East war has also lifted prices of crude palm oil (CPO) by 21% year-to-date.
The consensus is now split on further upside for Johor Plantations Group, with five ‘buy’ and four ‘hold’ calls among nine research houses tracked by Bloomberg. The average 12-month target price is RM2.16 post-results.
For RHB Research, which kept the stock on a ‘buy’ call, production is expected to recover in the second half of 2026 in line with seasonal output strength. Prices should also improve quarter-on-quarter, a positive for Johor Plantations Group given its high sensitivity to CPO, the house noted.
Further, “valuation seems reasonable” at nearly 15 times its forward earnings and within the range of its peers, RHB Research added.