Sarawak Plantation to enter harvest-led growth under new CEO

KUCHING (March 12): Sarawak Plantation Bhd (Sarawak Plantation) is entering a harvest-driven growth phase following the completion of several years of intensive replanting, with its management expecting rising fresh fruit bunch (FFB) production and improved estate productivity over the next few years while under the direction of a new chief executive officer (CEO).

This comes as the group appointed Iswandi Ayup as its new CEO to lead its next phase of operation growth.

According to a recent research update by Phillip Research Sdn Bhd (PhillipCapital), Iswandi who was previously the chief operating officer (COO) is expected to help reinforce strengthen execution discipline, cost control, and agronomic optimisation as the planter shifts its focus from replanting to maximizing yields from newly matured estates.

Sarawak Plantation’s management has guided that FFB production will rise to about 450,000 metric tonnes (MT) in 2026 and potentially reach around 680,000 by 2029 as roughly 9,000 hectares of replanted estates mature into higher-yielding age bands and productivity increases form mechanisation initiatives.

FFB yields are also targeted to improve from its current 17.93MT per hectare in 2025 to 21.8MT per hectare in 2026 and reach around 25 MT per hectare by 2029.

PhillipCapital noted that while the both FFB production and yield growth trajectory appears achievable, execution risks remain, including weather variability, the spread of Ganoderma disease and labour productivity challenges.

PhillipCapital’s own in-house forecasts expect SLP’s 2026 to 2027 production to grow by circa 8 per cent u-o-y, with volume growth becoming more visible from 2027 onwards.

Additionally, the analyst notes that while CPO output declined by 4 per cent y-o-y in 2025 to 191,826MT, underlying productivity metric remains supportive with 2025 oil extraction rate (OER) sitting at 19.41 per cent and Sarawak Plantation expecting OER to improve to 19.6 per cent in 2026.

“Together with rising yields, this should underpin structurally stronger, volume-led earnings from 2027 onwards,” said the analyst.

Sarawak Plantation is also expected to benefit from declining production costs as its management estimates CPO production costs could fall from about RM2,600 per tonne in 2025 to RM2,400 per tonne in 2026 and RM2,200 per tonne by 2027 due to higher volumes and better operating efficiency.

“With declining unit costs, Sarawak Plantation’s earnings leverage to CPO prices should strengthen, as sustained CPO average selling prices (ASP) would translate into stronger operating margins.

“Combined with stabilising palm kernel (PK) credit, Sarawak Plantation is well positioned to benefit from a supportive palm oil price environment over 2026 to 2028,” said the analyst who added that they maintain a CPO forecast of RM4,000 to RM4,200 per MT over the period.

Phillip Research maintained a ‘hold’ call on the stock with a target price of RM3.35, noting that while operational momentum is improving, near-term earnings visibility remains limited as the group increases fertiliser application and adjusts to seasonal production normalisation.

Nonetheless, the research house believes the group’s longer-term outlook remains positive as volumes recover and operating leverage improves from 2027 onwards.