RHB Investment Bank Bhd (RHB Research) maintained its OVERWEIGHT call on the plantation sector, with top picks including Johor Plantations Bhd, Sarawak Oil Palms Bhd, IOI Corp Bhd, Hap Seng Plantations Holdings Bhd, SD Guthrie Bhd, Triputra Agro Persada and First Resources, as the research house raised its crude palm oil (CPO) price assumptions for 2027 and 2028 on expectations of a strong El Niño event.
RHB Research lifted its CPO price forecasts to RM4,500 per tonne for 2027 and RM4,400 per tonne for 2028 from RM4,300 per tonne previously, citing weather models that point towards a potentially strong El Niño developing in 2026, with the biggest impact expected from October onwards.
The research house kept its 2026 CPO price assumption unchanged at RM4,400 per tonne, noting that current CPO prices are trading around RM4,600 to RM4,700 per tonne while the year-to-date average stands at RM4,366 per tonne.
RHB Research also highlighted improving sustainability performance across the sector following its annual ESG review, with the overall ESG score rising to 2.8 from 2.7 in 2025. The improvement was mainly driven by stronger environmental scores as companies recorded lower greenhouse gas emissions intensity, improved traceability and better compliance with sustainability certification standards.
The sector’s environmental score increased to 2.9 from 2.8, while social and governance scores remained unchanged at 2.5 and 2.8 respectively.
Despite maintaining forecasts and target prices for now, RHB Research said plantation valuations remain attractive and undervalued, as market prices continue to reflect CPO assumptions below RM4,400 per tonne for most companies under its coverage.
