KLK gets mixed calls as analysts weigh earnings recovery against valuation

Kuala Lumpur Kepong Bhd (KLK) received mixed analyst calls after releasing its latest quarterly results. Hong Leong Investment Bank (HLIB) lowered its rating on the stock to Hold from Buy, while CIMB Securities Sdn Bhd maintained its Buy recommendation. HLIB's Chye Wen Fei stated that KLK's core earnings of RM911.2 million in the first nine months of FY26 were in line with expectations, driven by stronger performance from its plantation and manufacturing segments in the last quarter.

HLIB also raised its target price to RM22.72 from RM21.97, anticipating a 1.8% increase in FY26 to FY28 core earnings.

However, HLIB downgraded KLK to Hold due to less attractive valuations after the stock's recent share price increase. CIMB Securities' Ivy Ng Lee Fang raised its target price to RM24.32 from RM23.70, noting that KLK's Q3 core net profit fell 25% year-on-year and 16% quarter-on-quarter to RM254 million due to higher associate losses.

Despite the decline, Ng considered the impairment of its Synthomer stake as largely valuation-neutral, as the company had already factored it into its sum-of-the-parts valuation. She also saw potential upside in KLK's new manufacturing capacity, higher-value specialty products, and its sizable land bank.