Broker: Maybank Investment Bank Berhad
Date of Report: July 9, 2025

SD Guthrie Ramps Up Carey Island Value Creation: New JVs, Strong Financials, and Strategic Partnerships Drive Growth

Overview: SD Guthrie’s Multi-Pronged Growth Strategy

SD Guthrie (SDG MK), Malaysia’s leading integrated plantation company, is accelerating its efforts to unlock value from its massive landbank, particularly on Carey Island. The company remains a dominant force with the largest oil palm planted area and is the world’s largest Certified Sustainable Palm Oil (CSPO) producer. This comprehensive update provides a deep dive into the company’s latest joint ventures, financial performance, risks, and future outlook.

Latest Developments: Strategic Joint Ventures and Industrial Park Initiatives

SD Guthrie has entered into a series of Memorandums of Understanding (MoUs) and Joint Ventures (JVs) since mid-2024, aiming to transform portions of its vast Peninsular Malaysia landbank. Notably, the new partnership on Carey Island, involving IJM, Permodalan Negeri Selangor Berhad (PNSB), and Yayasan Selangor, marks the seventh potential JV industrial park for the group, and the second major project on Carey Island.
Key Industrial Park Partnerships Announced Since Mid-2024:

• Kerian, Perak: PNB, Perak government – 1,000 acres
• HALMAS, Negeri Sembilan: TH Properties – 464 acres
• JS-SEZ, Kulai: AME Elite – 641 acres
• EcoBus Park, Negeri Sembilan: ECW (55%), SDG (30%), NS (15%) – 1,195 acres
• Carey Island (Part 1), Selangor: Sime Darby Property – 2,000 acres
• PDFZ, Negeri Sembilan: Menteri Besar Inc. Negeri Sembilan – 300-600 acres
• Carey Island (Part 2), Selangor: IJM, PNSB, Yayasan Selangor – 470 acres

These initiatives collectively cover 6,070 to 6,370 acres, approximately 1% of SD Guthrie’s Peninsular Malaysia landbank of ~592,000 acres.

Carey Island JV: Creating an Edu-Technology Park and Food Security Hub

SD Guthrie and PNSB have signed a MoU to explore the development of a visionary 470-acre Edu-Technology Park (ETP) and Food Security Hub (FSH) on Carey Island, Selangor. This development is part of a larger 1,296-acre masterplan, including land owned by Yayasan Selangor.
Project Highlights:

• The ETP will feature artificial intelligence, smart infrastructure, and green energy technology.
• Yayasan Selangor will develop an international-standard campus to improve educational access and human capital development.
• IJM, as the developer and infrastructure partner, brings expertise from leading Malaysia-China Kuantan Industrial Park (MCKIP), a 3,500-acre industrial zone with over MYR30 billion in committed investments.
• PNSB will act as the project’s lead proponent; SD Guthrie will serve as landowner and equity partner.

While detailed terms remain limited, the collaboration is seen as a proactive move to accelerate development and value realization on Carey Island. However, actual land disposal gains and development profits from this JV are not expected to materialize before 2026.

Landbank and Strategic Location

SD Guthrie owns approximately 28,646 acres on Carey Island, located about 65km southwest of Kuala Lumpur. The island’s proposed development is strategically positioned near key expressways, including the South Klang Valley Expressway (SKVE) and the under-construction West Coast Expressway (WCE), enhancing its accessibility and attractiveness for industrial and educational developments.

Financial Performance: Robust Results and Stable Outlook

SD Guthrie continues to deliver strong financials, underpinned by its core plantation business and new value creation initiatives. Below is a summary of key financial results and forecasts:

SD Guthrie maintains a healthy balance sheet, with a net gearing ratio projected to fall from 23% in FY23A to 8.7% in FY27E. The company’s net asset value (RNAV) per share is estimated at MYR10.03, with a 12-month target price of MYR5.52 (representing 0.55x RNAV and a 20% upside from the current MYR4.74).

Risks and Considerations

Investors should note several key risks that may affect SD Guthrie’s earnings and valuation:

• Weather anomalies impacting palm oil output
• Lower-than-expected Crude Palm Oil (CPO) prices
• Negative import policies from major buyer countries
• Unfavorable regulations in Malaysia, Indonesia, Papua New Guinea, and the EU
• Sharp declines in crude oil prices affecting palm biodiesel demand
• Weaker competing oil prices (soybean, rapeseed)

Shareholder Base and Market Position

SD Guthrie is majority owned by Permodalan Nasional Berhad (PNB) with 55.1%, followed by EPF (15.2%) and KWAP (6.6%). The free float is 48.0% with a market capitalization of MYR32.8 billion (USD7.7 billion), and 6,916 million shares issued. The company’s 52-week trading range is MYR5.15 to MYR4.15.

Price Performance and Analyst Ratings

SD Guthrie’s share price has shown resilience, supported by its strong fundamentals and strategic initiatives. The analyst maintains a BUY rating with a target price of MYR5.52, anticipating a return above 10% over the next 12 months.
Recent historical ratings reflect an upgrade to BUY from HOLD in early 2025, as the company’s value-unlocking strategies gain traction.

Comprehensive Financial Metrics

Key ratios and financial health indicators highlight SD Guthrie’s operational efficiency and prudent capital management:

• EBITDA margin: 17.3% (FY23A) to 21.0% (FY27E)
• Pretax profit margin: 14.9% (FY23A) to 13.0% (FY27E)
• Dividend payout ratio remains stable at ~50%
• Cash conversion cycle increases from 84.5 days (FY23A) to 101.3 days (FY27E)
• Current ratio strengthens from 1.3x (FY23A) to 2.3x (FY27E)

Conclusion: SD Guthrie Positioned for Sustainable Value Creation

SD Guthrie’s robust financial performance, extensive landbank, and proactive JV strategy position the company for sustainable long-term value creation. The new Carey Island partnerships—especially the Edu-Technology Park and Food Security Hub—underscore its commitment to innovative, high-impact developments. With a clear roadmap, solid balance sheet, and committed major shareholders, SD Guthrie stands out as a compelling investment opportunity for both institutional and retail investors seeking exposure to Malaysia’s plantation and industrial transformation story.