Even though SD Guthrie Bhd achieved an increase of 41% year-on-year for its nine months of 2024 (9M24) core profit at RM1.03 billion as it falls short of consensus expectations, research houses still maintained a favourable outlook for the plantation company.
RHB Investment Bank Bhd (RHB Research), MIDF Amanah Investment Bank Bhd (MIDF Research) and Maybank Investment Bank Bhd (Maybank IB) have maintained or upgraded their calls to BUY with target price ranges between RM5.20 and RM5.75, reflecting expected upsides of 8% to 17%.
The research houses forecasted that the company is poised for a strong rebound in the fourth quarter of 2024, driven by rising average selling prices, improving fresh fruit bunch (FFB) output and recovering downstream margins.
Despite regional challenges, such as reduced production in Indonesia and Papua New Guinea, the research houses emphasise the company's long-term growth potential as it focuses on operational recovery, particularly in its upstream segment, which is expected to elevate its FFB yield to 19 metric tonnes per ha by FY24. SD Guthrie's downstream prospects also remain promising, supported by a rebound in margins across Europe and Asia Pacific.
With its shares currently trading at RM4.87 as of 11.53am on Nov 21, SD Guthrie offers both income and growth potential, reinforced by an expected dividend yield of between 2% and 2.2%. The research houses remain optimistic about its diversified strategy and ability to capitalise on rising global palm oil demand.
