CGS International
May 27, 2025
Hap Seng Plantations Leads Malaysian Plantation Peers with Superior CPO ASP and Cost Efficiency: Full Financial Breakdown and Sector Comparison
Overview: Hap Seng Plantations’ Strong Start to 2025
Hap Seng Plantations (HAPL) delivered a solid 1Q25 performance, with a core net profit of RM39 million—a result that aligns with both internal and consensus expectations. The quarter’s earnings were impacted by lower crude palm oil (CPO) production and sales volumes on a quarter-on-quarter (qoq) basis. However, higher CPO average selling prices (ASP) and cost discipline continue to differentiate HAPL from its peers.
1Q25 core net profit: RM39 million (down 36% qoq, up 61% year-on-year)
CPO ASP: RM4,866/tonne, the highest among peers for 1Q25
1Q25 results contributed 28% of CGS International and 24% of Bloomberg consensus full-year forecasts
Near-Term Outlook: Weaker 2H25 Expected but HAPL Set to Outperform
Looking ahead, 2H25 earnings are anticipated to be lower due to a decline in CPO prices (down 21% since April 2025). However, HAPL is expected to maintain relatively stronger performance than peers, thanks to:
Consistently higher CPO ASP (typically 10-15% above peers, attributed to sustainability and food-grade certifications)
Superior cost efficiency
Potential offset from higher production and lower production costs in the second half
Investment Case: Attractive Valuation and Resilient Dividend Yield
CGS International reiterates an “Add” rating on HAPL with an unchanged target price (TP) of RM2.25, based on a forward P/E of 13x for FY25F—a 30% discount to the KLPLN index’s long-term mean of 19x.
Key investment highlights:
HAPL trades at an appealing 11x FY25F P/E, below its five-year mean of 15x
Dividend yield remains attractive at 5.7% for 2025F, with payout ratios above 60% forecasted for 2025-2027
Downside risks: Lower-than-expected FFB yields (especially with heavy rainfall in Sabah) and weaker sales volumes
Upside catalysts: Higher-than-expected FFB and CPO output, and increased dividend payouts
Detailed Financial Performance: 1Q25 Results Table
|
1Q24 |
4Q24 |
1Q25 |
Qoq % chg |
Yoy % chg |
| Revenue (RM m) |
159.00 |
233.37 |
179.43 |
(23.1) |
12.8 |
| EBITDA |
57.01 |
103.68 |
63.26 |
(39.0) |
11.0 |
| EBIT |
35.66 |
82.31 |
41.58 |
(49.5) |
16.6 |
| PBT |
48.47 |
111.12 |
29.71 |
(73.3) |
(38.7) |
| Net Profit |
36.53 |
85.01 |
22.49 |
(73.5) |
(38.4) |
| Core Net Profit |
24.51 |
60.92 |
39.33 |
(35.5) |
60.5 |
Key Shareholder and Market Data
- Major shareholder: Hap Seng Consolidated Berhad (69.5%)
- Market cap: US\$345.3 million (RM1,463 million)
- Current shares outstanding: 799.7 million
- Free float: 25.4%
- Average daily turnover: RM1.10 million (US\$0.25 million)
Peer Comparison: How HAPL Stacks Up
| Company |
Ticker |
Reco. |
Price |
Target Price |
Market Cap (US\$ m) |
P/E (CY25F) |
P/E (CY26F) |
2-yr EPS CAGR (%) |
P/BV (CY25F) |
P/BV (CY26F) |
ROE (CY25F) |
ROE (CY26F) |
Div Yield (CY26F) |
| SD Guthrie Bhd |
SDG MK |
Add |
4.67 |
5.20 |
7,619 |
21.0 |
21.2 |
40.0 |
1.56 |
1.50 |
7.0% |
2.4% |
| Kuala Lumpur Kepong |
KLK MK |
Hold |
20.36 |
19.50 |
5,349 |
48.3 |
18.5 |
35.5 |
1.61 |
1.56 |
8.7% |
3.2% |
| IOI Corporation |
IOI MK |
Hold |
3.72 |
3.50 |
5,445 |
18.9 |
16.8 |
6.5 |
1.92 |
1.82 |
10.8% |
3.0% |
| Genting Plantations |
GENP MK |
Hold |
4.86 |
5.90 |
1,029 |
14.6 |
14.8 |
12.7 |
0.82 |
0.82 |
5.5% |
4.1% |
| Hap Seng Plantations |
HAPL MK |
Add |
1.83 |
2.25 |
345 |
11.1 |
10.5 |
18.7 |
0.72 |
0.69 |
6.7% |
5.7% |
| Ta Ann |
TAH MK |
Add |
3.98 |
5.50 |
414 |
9.8 |
9.4 |
2.3 |
0.95 |
0.82 |
9.1% |
6.4% |
| Malaysia average |
|
20.6 |
15.2 |
19.3 |
1.26 |
1.20 |
8.0% |
4.1% |
Comprehensive Financial Forecast: Hap Seng Plantations
|
Dec-24A |
Dec-25F |
Dec-26F |
Dec-27F |
| Total Net Revenues (RM m) |
811.8 |
786.3 |
766.7 |
774.5 |
| Gross Profit |
352.6 |
253.3 |
222.2 |
212.9 |
| Operating EBITDA |
352.6 |
253.3 |
222.2 |
212.9 |
| Operating EBIT |
267.5 |
169.0 |
138.8 |
130.2 |
| Profit Before Tax (pre-EI) |
283.9 |
172.9 |
142.7 |
134.1 |
| Net Profit |
264.0 |
139.3 |
115.9 |
109.9 |
| Recurring Net Profit |
220.7 |
139.3 |
115.9 |
109.9 |
| Total Cash And Equivalents |
624 |
705 |
769 |
825 |
| Shareholders’ Equity |
2,104 |
2,188 |
2,251 |
2,309 |
| Operating EBITDA Margin |
46.9% |
32.2% |
29.0% |
27.5% |
| Net Dividend Payout Ratio |
24.6% |
60.0% |
60.5% |
61.1% |
| Dividend Yield |
5.71% |
4.79% |
4.59% |
n/a |
| ROIC (%) |
14.5% |
8.9% |
7.3% |
6.8% |
Operational Metrics and Key Drivers
- Planted Estates (hectares): 39,057 (2024A) rising to 41,543 (2027F)
- Mature Estates (hectares): 35,238 (2024A), expected to remain stable through 2027
- FFB Yield (tonnes/ha): 19.4 (2024A), growing modestly to 20.0 (2027F)
- FFB Output Growth: 3.5% (2024A), moderating to 1.0% (2027F)
- CPO Price (RM/tonne): RM4,200 (2024A), RM4,095 (2027F forecast)
Valuation and Price Performance
– HAPL’s share price closed at RM1.83, with a target price of RM2.25, representing a 23% potential upside. – The stock trades below its historical five-year mean P/E and below the sector’s long-term average. – Price performance: Down 5.2% in the past month, but up 2.2% over 12 months.
Sector-Wide Investment Insights and Ratings Distribution
– Out of 551 companies covered by CGS International as of March 31, 2025: – 71.0% rated Add – 20.9% rated Hold – 8.2% rated Reduce – Investment banking clients represent a small portion of Add-rated companies, ensuring objectivity.
Conclusion: HAPL’s Competitive Edge in Malaysian Agribusiness
Hap Seng Plantations stands out in the Malaysian plantation sector with its leading CPO ASP, best-in-class cost control, and favorable valuation. While the sector faces near-term pressure from falling CPO prices, HAPL’s certifications, disciplined cost structure, and attractive dividend yield provide resilience and upside potential for investors seeking exposure to the agribusiness sector.
Investors should monitor developments in CPO pricing, Sabah weather impacts, and production trends, as these will be decisive for both HAPL and its sector peers in 2025 and beyond.
