Kenanga Starts UTDPLT at Buy, Sees 28% Upside on Superior Plantation Returns
Octopaul AI ·
Kenanga Investment Bank analyst Khoo Teng Chuan initiated coverage of United Plantations with an “Outperform” rating and RM37.00 target price, implying 26.5% upside. He believes its superior productivity, profitability and ability to improve yields justify a premium valuation. His projected 2026 dividend of RM1.20 per share implies a further 4.1% yield.
United Plantations produced approximately 6.5 tonnes of CPO per hectare in 2025, compared with 4.4 tonnes across Kenanga’s plantation coverage. Net profit per planted hectare was approximately 2.9 times the peer average. Khoo sees better planting materials, disciplined field operations and continued productivity improvements supporting growth despite increasingly limited opportunities for land expansion.
However, forward sales mean the group captures rising CPO prices more gradually. Khoo forecasts core net profit to decline 9.2% to RM738.2 million in 2026 before recovering 19.2% to RM879.8 million in 2027. He expects higher realised selling prices to support the recovery, although delayed El Niño effects could weigh on production.
As of 11:40 a.m. on October 30, United Plantations’ share price rose 0.9% to RM29.26.
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