Kuala Lumpur Kepong Bhd (KLK) remained on track with its core earnings despite a RM1.6 billion impairment on associate Synthomer plc with MBSB Investment Bank Bhd maintained its NEUTRAL call and RM20.15 target price while Hong Leong Investment Bank Bhd (HLIB) downgraded the stock to HOLD from Buy but raised its target price to RM22.72.
MBSB said the impairment was a one-off, non-cash and non-operational item while HLIB expects stronger plantation and manufacturing earnings to support the fourth quarter.
KLK’s 9MFY26 core profit came in at RM892.4 million according to MBSB and RM911.2 million based on HLIB’s calculations, with both research houses viewing the performance as broadly within expectations. The headline results were dragged by the Synthomer impairment, which pushed the group into a reported quarterly loss of RM1.3 billion.
Still, the group’s underlying operations remained resilient. Upstream profit rose 7.6% year-on-year to RM658.3 million in 3QFY26, supported by firmer palm kernel prices and higher CPO and sales volumes. Downstream profit more than doubled to RM136.5 million, helped by stronger oleochemical earnings.
HLIB raised its FY26 to FY28 core earnings forecasts by 1.8%, 1.8% and 4.7% respectively, citing higher CPO price assumptions. However, it said the recent share price rally has made KLK’s valuation less attractive, prompting the downgrade to HOLD.
As of 10.43 am, the stock price slipped 0.27% to RM21.86.
