KUALA LUMPUR (Oct 29): SD Guthrie Bhd (KL:SDG) is expected to see a sharp decline in its net profits for its upcoming third quarter, although its full financial year remains on track to meet forecast, said CIMB Securities.

“We expect core net profit to decline 32% quarter-on-quarter to RM645 million as lower land disposal gains more than offset stronger upstream earnings,” said the research house in a note on Thursday. 

The world's largest listed oil palm planter by acreage is due to release its third-quarter results on Nov 5.

The estimated three-month earnings ending Sept 30 will bring its core net profit to RM2.14 billion, 71% of the research house’s forecast. CIMB Securities remains optimistic about the palm oil producer’s ability to meet its 2026 financial year earnings forecast.

This is driven by higher fresh fruit bunches (FFB) production, up by 8% in both quarter-on-quarter and year-on-year. 

Assuming crude palm oil (CPO) and palm kernel prices remain steady, FFB could contribute around RM52 million in upstream profits before tax, it added.

CIMB Securities also took into account the possible recognition of SD Guthrie’s disposal of the Bukit Kerayong land by the fourth quarter of 2026. This sale is estimated to bring a net profit of around RM408 million.

SD Guthrie also has another land disposal deal in Kulai, valued at RM419 million. This is scheduled for disposal in the second quarter of 2027 and is part of the company’s larger land monetisation strategy.

The research house upgraded its call to ‘buy’ following a 17% share price correction after its August peak of RM6.91, as it offers an attractive entry point ahead of a potential CPO price upcycle in 2027.

However, CIMB Securities lowered its target price by 34 sen to RM6.52 in response to heightened Indonesian regulatory risks.