Sarawak Plantation upgraded on strong FFB growth outlook

KUCHING (March 24): Analysts from Public Investment Bank Bhd (PublicInvest Research) have upgraded their rating for Sarawak Plantation Bhd (Sarawak Plantation) to ‘outperform’ following an announcement from the planter that they have set an aggressive fresh fruit bunch (FFB) production growth target that could see its output more than double by the end of 2030.

The Sarawak-based planter is aiming for its FFB output to increase from about 361,000 metric tonnes in 2025 to around 750,000 metric tonnes by 2030.

PublicInvest Research guided that Sarawak Plantation’s ambitious FFB production guidance will be driven by rising plantation maturity as more than 9,000 hectares (ha) of its planted estates are expected to turn mature by 2030.

Note that since 2021, Sarawak Plantation has embarked on an aggressive replanting strategy that saw the group having completed more than 10,000 ha of replanting so far.

The aggressive replanting activities has caused Sarawak Plantation to have one of the youngest plantation age profiles in Malaysia, with an average age of about 8.5 years.

As of the end-2025, Sarawak Plantation’s total planted area stood at 29,500 ha, with mature area making up nearly 70 per cent and ageing estates making up roughly 9 per cent.

The higher-than-expected target is also supported by the fact that the planter has managed to achieved FFB production growth for the last two years.

“Meanwhile, FFB yield is projected to expand significantly from FY25’s 17.9 metric tonne (MT) per hectare (ha) to 21.8 MT per ha this year and a higher level of 24.7 MT per ha next year,” the analyst added.

To reflect this stronger-than-expected FFB production growth guidance from Sarawak Plantation, PublicInvest Research are also raising their FY26 and FY27 earnings expectations by 15 to 20 per cent.

Subsequently, they have also raised their 12-month target price (TP) from RM3.51 to RM4.08 based on a 10-times FY26 earnings per share (EPS), which implies a potential upside of about 12.7 per cent from the current price of RM3.62.

Looking ahead, Sarawak Plantation is also expected to benefit from cost savings as its replanting activities are expected to drop to about 500 ha in 2026, 1,300 ha in 2027, and minimal replanting in 2028 and 2029.

Overall, PublicInvest Research reckons that the group’s relatively young plantation profile and improving operational efficiency places it in a favourable position to benefit from the next upcycle in palm oil production.

Separately, Sarawak Plantation has also resolved a long-standing issue involving 2,100 hectares of encumbered mineral land in its central region.

The planter will swap the land for a 2,000-hectare parcel of native customary rights land in Ulu Bawan, located about five kilometres from its Mukah palm oil mill.

The land will be developed into an oil palm plantation, with local communities receiving rental income under the arrangement.