IOI Corp Reaping From Higher CPO Price, Earnings Forecast Raised

IOI Corporation Bhd’s earnings growth is expected to carry into FY27, supported by firm crude palm oil (CPO) prices, continued fresh fruit bunch (FFB) production growth and improving manufacturing margins, according to Hong Leong Investment Bank Bhd (HLIB Research).

HLIB Research said IOI’s 4Q26 core earnings jumped 49.8% quarter-on-quarter and 23.9% year-on-year to RM406.3 million, lifting full-year core earnings by 14.7% to RM1.47 billion, broadly in line with expectations.

The stronger quarter was driven by improvements across both plantation and manufacturing. HLIB Research noted that plantation earnings benefited from higher realised palm product prices, stronger FFB output and better oil extraction rates, while the manufacturing division gained from stronger refinery and oleochemical margins and sales volumes.

Looking ahead, management expects CPO prices to remain firm into mid-2027 and has already locked in about 40% of projected FY27 CPO production through forward sales, HLIB Research said. FFB production, which rose 4.2% to 2.96 million tonnes in FY26, is also expected to continue growing despite drier conditions affecting some Indonesian estates.

HLIB Research added that oleochemical demand could improve in 1H27 as customers restock ahead of the European Union Deforestation Regulation and amid geopolitical uncertainties, providing further support to manufacturing margins.

Following the results, HLIB Research raised its FY27 and FY28 core earnings forecasts by 9% and 7.2%, respectively, reflecting higher CPO price assumptions and improved manufacturing earnings. It maintained its ‘Buy’ rating and raised its target price to RM5.10 from RM4.73.

HLIB Research forecasts IOI’s core PATMI at RM1.54 billion for FY27, while the group declared a second interim dividend of seven sen per share, bringing total FY26 dividends to 12.5 sen.