CIMB Investment Bank Bhd (CIMB Securities) has maintained its OVERWEIGHT call on the plantation sector, citing that greater environmental, social and governance (ESG) transparency among Malaysian planters could pave the way for a sector re-rating. The research house said companies under its coverage recorded the strongest gains in the environmental pillar of the 2025 SPOTT assessment, with moderate improvements in the social and governance categories.
In its report, CIMB Securities highlighted SD Guthrie, IOI Corporation and Hap Seng Plantations as key beneficiaries of this rising ESG transparency, maintaining Buy calls on all three. SD Guthrie led globally with a SPOTT score of 97.5%, up 2.7 percentage points from the previous year, while IOI Corporation and Hap Seng Plantations recorded scores of 85.1% and 91.2%, ranking 20th and 15th, respectively, among the 100 palm oil companies assessed.
CIMB Securities noted that the SPOTT assessment, published by the Zoological Society of London (ZSL), is widely tracked by investors and evaluates up to 192 ESG indicators across 10 categories. The report’s findings show that while transparency among Malaysian planters has improved, global progress remains uneven, with only 51% of firms disclosing deforestation monitoring and just 18% achieving full supply chain traceability.
Despite these gaps, Malaysian companies stood out in the 2025 SPOTT results, benefiting from strengthened environmental reporting, deforestation monitoring and emissions disclosure ahead of the upcoming European Union Deforestation Regulation (EUDR) and COP30 in Brazil. The research firm added that the social pillar also improved due to greater disclosure on labour rights, smallholder inclusion and community engagement, while governance scores remained largely stable.
CIMB Securities said stronger ESG transparency could attract renewed foreign investor interest in Malaysian plantations, which have long been under-owned due to sustainability concerns. The improvement in rankings, particularly with SD Guthrie and United Plantations taking the top two global spots, reflects growing efforts among local planters to align with international sustainability standards.
In terms of valuation, CIMB Securities set target prices at RM6.01 for SD Guthrie, RM4.11 for IOI Corporation, and RM2.23 for Hap Seng Plantations. The research house added that these firms’ consistent improvements in ESG metrics, coupled with healthy dividend yields ranging between 2.5% and 4.6%, could support long-term sector re-rating prospects as global investors increasingly favour transparent and sustainable palm oil producers.
