Stronger upstream and land monetisation lift Sime Darby Guthrie’s profit outlook

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POST earnings revision, MBSB Research upgrades Sime Darby Guthrie (SDG) to BUY. 

“We switched our valuation method after factoring higher profit from upstream contribution and recurring profit from land monetisation RM500 mil per annum (p.a) over the next 5 years,” said MBSB.

They remained optimistic with its upstream subsegment where recovery in Group’s fresh fruit bunch (FFB) yield projected to reach 19-20Mt/ha level in financial year 2025 – 2026 (FY25-26), thanks to the intensive rehabilitation efforts undertaken for the past couple of years in Malaysia area.

Meanwhile, downstream earnings rose +20.6% year-on-year (yoy), as stabilised bulk margins and stronger sales performance in selected markets helped offset the impact of margin differentiation across refineries.

The group’s upstream bottom-line in the quarter, remained decent, holding steady at RM627.0 mil, driven by improved labour efficiency, whilst Indonesia was still on recovery mode from weather-related disruptions. 

Operationally, estates activities maintained intact, well supported by effective field recovery efforts, favourable harvesting conditions and reinforced field supervision.

The group’s average CPO and PK realised prices increased to RM4,210/Mt (+6.6%yoy) and RM3,125/Mt (+27.6%yoy), respectively. Meanwhile, the all-in cost of production, estimated to stabilised RM2,500/Mt, attributed to the higher oil extraction rate (OER) and oil Yield.

The downstream’s quarter three financial year 2025 (3QFY25) profit rose to RM152 mil driven by higher trading segment’s profits as it benefited from higher trading spreads, however differentiated market segment, particularly the European operations, suffered from intense competition with aggressive pricing. —Nov 6, 2025

Main image: SD Guthrie

 

The post Stronger upstream and land monetisation lift Sime Darby Guthrie’s profit outlook first appeared on Focus Malaysia.

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