Hap Seng Plantations Outlook Supported by Stronger Harvest and Lower Costs

Hap Seng Plantations Holdings Bhd (HSPLANT) remains optimistic on its FY26 outlook, supported by stronger fresh fruit bunch (FFB) production, resilient crude palm oil (CPO) prices and easing operational cost pressures.

Management maintained its FY26 FFB production guidance at 715,000 metric tonnes, with output expected to strengthen from June before peaking between September and October. Analysts are retaining their FY26 FFB assumption at 704,000 metric tonnes, supported by improved weather conditions in the first half of 2026 compared with last year’s excessive rainfall caused by La Niña conditions.

Although El Niño risks may emerge in the second half of 2026, management expects overall yields to improve year-on-year due to more neutral weather conditions earlier in the year.

Fertiliser costs are also expected to remain manageable, with FY26 expenses projected to increase only five to 10 per cent year-on-year after supplies for both halves of the financial year were secured earlier.

HSPLANT will continue its replanting programme involving about 1,000 hectares in FY26, representing roughly three per cent of mature planted areas. The full replanting cost is estimated at RM40,000 per hectare over three years.

Meanwhile, CPO unit costs are expected to decline to RM2,223 from RM2,477 previously, driven mainly by stronger production volumes.

The group’s strong net cash position of RM665mil and favourable CPO price outlook are also expected to support dividend visibility, with dividend yields projected at five to six per cent for FY26.

Analysts maintained a “BUY” recommendation with a target price of RM2.80.

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