Plantations hold steady: Analysts

Kuala Lumpur: Plantation firms under Hong Leong Investment Bank Bhd's scope delivered earnings in line with expectations in the second quarter of 2026, with upstream recovery offsetting weaker performance at some companies. Of the six planters monitored, five met expectations, while Johor Plantations Group Bhd reported lower earnings due to falling fresh fruit bunch production.

Overall core earnings rose 1% quarter-on-quarter to RM861 million, lifted by higher upstream earnings and higher palm product prices, but weighed down by lower earnings at Hap Seng Consolidated, Johor Plantations, and Kuala Lumpur Kepong. On a year-on-year basis, aggregate core earnings remained flat, as gains at Hap Seng and IOI Corp were offset by weaker results from Johor Plantations and Kuala Lumpur Kepong.

Factors such as lower FFB production, higher production costs, and the impact of the ongoing El Nino contributed to the mixed earnings performance among the monitored planters. The downstream segment, however, recovered both quarter-on-quarter and year-on-year, driven by improved demand in the oleochemical sub-segment. Despite challenging competition from Indonesian producers, the firm maintained its overweight stance on the sector, citing expectations of sustained elevated CPO prices through the second half of 2026 due to supply constraints and resilient demand.