Kuala lumpur: Kenanga Investment Bank Bhd has maintained a ‘neutral’ call on the plantation sector, stating that earnings are expected to remain robust into the calendar year 2026 (CY26) but will lack strong upside catalysts. “Our ‘neutral’ weight for the sector is left intact. Our picks are now Kuala Lumpur Kepong (KLK) with an ‘outperform’ (OP) rating and a target price (TP) of RM23.00, Hap Seng Plantations Holdings (OP; TP: RM2.40), and PPB Group (OP; TP: RM10.50),” the bank mentioned in a research note.

According to BERNAMA News Agency, Kenanga has reported that third-quarter CY25 plantation earnings should remain firm, but fourth-quarter CY25 and CY26 earnings could ease due to stronger year-earlier comparatives. It has increased its crude palm oil (CPO) price forecast for CY25 to RM4,300 per tonne, up from RM4,200, based on resilient year-to-date prices. However, its CY26 estimate remains unchanged at RM4,000 per tonne.

RHB Investment Bank Bhd has also kept a ‘neutral’ stance on the sector, observing that CPO prices are likely to moderate as output peaks, even though festive demand should provide some support. Malaysia’s palm oil inventory rose four per cent in August 2025 to 2.2 million tonnes, lifting the stock-to-usage ratio above its historical average. “We expect stock levels to stay above two million tonnes in the near term, given peak output,” RHB noted.

The bank’s top picks include value plays such as Johor Plantations Group, IOI Corp, Sarawak Oil Palms, and PT Perusahaan Perkebunan London Sumatra Indonesia Tbk, along with situational plays like SD Guthrie and First Resources Ltd.