Kuala lumpur: Hong Leong Investment Bank Bhd (HLIB) is maintaining its crude palm oil (CPO) price assumption of RM4,200 per metric tonne (mt) and earnings forecasts for 2026 for now, pending a review following Indonesia's recent move to delay the implementation of its B50 mandate.

According to BERNAMA News Agency, HLIB said the results for the fourth quarter of financial year 2025 are expected to be broadly in line with expectations despite weaker year-on-year upstream performance. The bank noted that quarter on quarter (q-o-q) earnings will likely be mixed, reflecting uneven fresh fruit bunches (FFB) output trends, and highlighted challenges in the downstream segment.

HLIB further explained that despite a seasonally lower cropping pattern, four out of seven planters under its coverage, namely Genting Plantation Bhd, Hap Seng Plantation Holdings (HSP), IOI Corporation Bhd, and Kuala Lumpur Kepong Bhd, recorded positive q-o-q growth in FFB output. This growth was attributed mainly to cropping pattern shifts in parts of Malaysian estates, which is expected to result in mixed q-o-q earnings in the upcoming results season.

The bank also pointed out that downstream performance would likely remain subdued due to the export tax and levy differential between Malaysia and Indonesia, persistent overcapacity in Indonesia, and high palm kernel prices which persisted until the end of October 2025.

On another note, HLIB observed that higher restocking activities ahead of major festivals, along with seasonally lower output, lifted CPO prices by four per cent to RM4,134/mt since early January 26, bringing the year-to-date average to RM4,050/mt. It maintained its overweight stance on the plantation sector, with top picks being SD Guthrie Bhd (target price (TP): RM6.49) and HSP (TP: RM2.57).