KUALA LUMPUR: SD Guthrie’s earnings are expected to improve this year, on higher land sale gains from eight ongoing land-related joint ventures (JVs), CIMB Securities Sdn Bhd said.
The positive outlook is underpinned by expected higher land sale gains from several JVs, including projects still at the memorandum of understanding (MoU) stage or awaiting sale and purchase agreements, including a plan to develop 2,023 hectares (ha) of land in Kulai, Johor.
SD Guthrie has signed an MoU with Permodalan Darul Ta’zim, a wholly-owned company of the Johor state government, to jointly explore the proposed mixed-use development, which will focus on an industrial park.
“Assuming SD Guthrie is able to sell all of the land at RM15 per square foot and the group retains a 20 per cent stake in the development, we estimate potential land sale gains of around RM1.9 billion,” CIMB Securities said in a note.
It aims to monetise about 1,000 ha of land annually, potentially generating RM500 million to RM700 million in earnings per year. This could lift full-year net profit to around RM2.5 billion, surpassing the projected core net profit of RM1.8 billion to RM1.9 billion.
The group currently retains 20 per cent to 50 per cent stakes in its land sale JVs across Selangor, Negri Sembilan and Johor, providing future recurring income from industrial land development.
In the third quarter of the financial year 2025, SD Guthrie recorded a land sale gain of RM435 million from the sale of land to the EcoWorld group.
CIMB Securities said there is potential upside to core net profit and dividend forecasts if annual land sale gains reach or exceed RM500 million to RM700 million in 2026.
Land sale gains have not yet been included in core earnings estimates, as the segment remains relatively new for the group. Near-term earnings, however, may face some pressure.
SD Guthrie’s fourth-quarter (Q4) net profit is expected to be affected by lower average crude palm oil (CPO) prices and weaker fresh fruit bunches (FFB) output.
The Malaysian Palm Oil Board reported that average CPO prices fell two per cent quarter-on-quarter and 13.5 per cent year-on-year to RM4,181 per tonne in Q4.
The group, however, managed to secure a higher average CPO price of RM4,365 per tonne for its Malaysian operations during the quarter.
As a result, Q4 net profit is forecast to ease to RM414 million, compared with RM499 million in Q3.
Despite the softer near-term outlook, CIMB Securities maintained a “Buy” call on SD Guthrie, with a target price of RM6.01.
© New Straits Times Press (M) Bhd
