CIMB Investment Bank Bhd (CIMB Securities) said United Malacca Bhd remains a BUY with a higher target price of RM6.93 as analysts highlighted structural yield improvements and a productivity gap in Indonesian estates as key upside drivers despite FY26 results coming in broadly in line with expectations.
United Malacca recorded FY26 core net profit of RM157.6 million, up 35.1% year-on-year and within expectations at 104.4% of CIMB and 95.6% of consensus forecasts, the research house said. Analysts noted that stronger palm kernel prices helped offset weaker Malaysian operations in the fourth quarter.
In 4QFY26, core net profit fell 15.5% year-on-year and 23% quarter-on-quarter to RM29 million as Malaysian estate earnings declined on lower fresh fruit bunch production and higher costs. However, this was partially offset by a 57.8% jump in Indonesian plantation profit supported by better milling efficiency and lower unit costs.
CIMB said Malaysian operations remained the main earnings contributor, accounting for 75% of EBITDA, but Indonesia continues to lag in productivity despite its larger planted area. Malaysian estates achieved higher EBITDA per hectare at RM11,139 compared to Indonesia’s RM8,946, reflecting stronger yields and pricing.
The research house noted that a RM5.6 million impairment related to the Sulawesi project weighed on reported earnings, alongside forex losses and write-offs, although core earnings would have been stronger without these one-offs.
United Malacca declared a total FY26 dividend per share of 20 sen, including a special dividend, slightly below CIMB’s forecast by 2 sen. Analysts said this reflects a more conservative payout approach despite stronger earnings growth.
Looking ahead, CIMB expects earnings momentum to continue with FY27 core net profit forecast to rise 4.4% to RM164.9 million, supported by firmer crude palm oil prices and production growth. The house also raised its SOP-based valuation, lifting its target price to RM6.93 after updating net cash assumptions and applying a higher holding company discount.
As of 11.51 am, the stock price gained 0.17% to RM5.91.
