Share upside as plantation stocks draw attention on earnings, dividends

KUALA LUMPUR: Ta Ann Holdings Bhd has emerged as the most attractive plantation stock in terms of potential share-price gains, with a target price of RM8.55 implying a 50.5 per cent upside, as improving production, earnings prospects and dividend yields underpin investment interest in the sector.

Public Investment Bank (PublicInvest) has named Ta Ann, Genting Plantations Bhd, SD Guthrie Bhd and Sarawak Plantation Bhd as "Outperform" picks, while maintaining "Neutral" calls on IOI Corp Bhd and Kuala Lumpur Kepong Bhd (KLK).

Ta Ann's target price of RM8.55 compares with its market price of RM5.68 (Oct 20), giving it the highest potential upside among the six plantation companies assessed.

SD Guthrie follows with a target price of RM7.81, representing a 36.5 per cent upside from RM5.72 (Oct 20), while Genting Plantations has a target price of RM6.84, implying a 34.1 per cent gain from RM5.10 (Oct 20), the firm said in a recent note.

It said Sarawak Plantation offers a potential upside of 27.9 per cent, with a target price of RM5.59 against its price of RM4.37 (Oct 20).

Among the larger plantation counters, KLK has a target price of RM23.86, suggesting an 18.4 per cent upside from RM20.16 (Oct 20), while IOI Corp has a target price of RM5.06, representing a 12.4 per cent gain from RM4.50 (Oct 20).

The preference for selected plantation stocks comes as investors weigh earnings growth and dividend income against commodity-price volatility, production costs and changing export dynamics.

Based on financial forecasts, PublicInvest analyst Chong Hoe Leong said Ta Ann offers the highest projected dividend yield among the six companies at 8.8 per cent for both financial years 2026 and 2027. Sarawak Plantation follows at 6.9 per cent, while Genting Plantations offers 5.8 per cent.

Ta Ann's appeal is further supported by its earnings outlook. Its earnings per share (EPS) are forecast to rise from 63.3 sen in 2026 to 66.1 sen in 2027, while its forward price-to-earnings (P/E) ratio is expected to decline from nine times to 8.6 times.

Sarawak Plantation is also expected to deliver earnings growth, with EPS projected to increase from 43.1 sen in 2026 to 46.6 sen in 2027. Its forward P/E ratio is forecast to ease from 10.1 times to 9.4 times, alongside a projected dividend yield of 6.9 per cent.

Its return on equity (ROE) is expected to improve from 13.9 per cent in 2026 to 14.3 per cent in 2027, placing it among the stronger performers in the group.

Genting Plantations, meanwhile, is forecast to record EPS of 46.9 sen in 2026 and 47.1 sen in 2027, with its forward P/E ratio remaining relatively stable at 10.9 times and 10.8 times, respectively.

The outlook is less straightforward for SD Guthrie, despite its substantial implied share-price upside. Its EPS is projected to decline from 42.7 sen in 2026 to 39 sen in 2027, representing a fall of 8.6 per cent, while its forward P/E ratio is expected to rise from 13.4 times to 14.7 times. Its dividend yield is also forecast to moderate from 3.8 per cent to 3.5 per cent.

For IOI Corp, EPS is expected to rise from 25.1 sen in 2026 to 26.2 sen in 2027, while its forward P/E ratio declines from 17.9 times to 17.2 times. Its dividend yield is projected to edge up from 2.8 per cent to 2.9 per cent.

KLK is similarly expected to post moderate earnings growth, with EPS rising from RM1.162 to RM1.204 over the same period. Its forward P/E ratio is forecast to ease from 17.3 times to 16.7 times, while its dividend yield remains at 3 per cent.

Ta Ann also leads the group in projected ROE, at 15.6 per cent in 2026 and 15.3 per cent in 2027, followed by Sarawak Plantation at 13.9 per cent and 14.3 per cent, respectively.

The valuations suggest that Ta Ann and Sarawak Plantation offer a combination of income and earnings growth, while the target-price upside at SD Guthrie and Genting Plantations may appeal to investors seeking capital appreciation.

However, target prices are estimates rather than guaranteed returns, and the sector's performance will remain sensitive to crude palm oil prices, fresh fruit bunch production, operating costs and export competitiveness.