KUALA LUMPUR (Feb 25): IOI Corporation Bhd's (KL:IOICORP) net profit is expected to ease in the second half ending June 30, 2026 (2HFY2026), due to seasonally lower fresh fruit bunch (FFB) output and softer crude palm oil (CPO) prices, according to CIMB Securities.

The research house noted that while demand ahead of major festivals and palm oil’s discount to soybean oil may lend support, upside is likely capped by a stronger ringgit, high Malaysian stock levels and delays in Indonesia’s B50 biodiesel roll-out.

IOI Corp's core net profit for the second quarter ended Dec 31, 2025 (2QFY2026) rose 4% quarter-on-quarter (q-o-q) and 3% year-on-year (y-o-y) to RM405 million, supported by stronger plantation and resource-based manufacturing earnings. 

"This brings 1HFY2026 core net profit to RM795 million, up 21% y-o-y, broadly in line with expectations at 53% of our full-year forecast and 57% of consensus estimates.

“Reported 1HFY2026 net profit came in at RM898 million, exceeding core earnings mainly owing to a net foreign exchange gain of RM110.7 million and a RM5.4 million fair value gain on biological assets, partially offset by RM26.5 million in fair value losses on derivatives”, said the research house in a note.

The plantation segment remained the backbone, contributing 79% of pre-tax profit. 

Earnings before interest and taxes (Ebit) rose 9% q-o-q to RM404 million, driven by a 12.3% increase in FFB output to roughly 874,000 tonnes and lower unit costs of RM2,361 per tonne. Average CPO and palm kernel prices of RM4,224 and RM3,449 per tonne were above Malaysian Palm Oil Board averages, cushioning the impact of softer y-o-y prices.

Furthermore, CIMB Securities noted that resource-based manufacturing operations also showed improvement, swinging to a RM20 million profit in 2QFY2026 from RM5 million a year earlier, while associates contributed RM45 million. 

For 1HFY2026, resource-based manufacturing Ebit came in at RM104 million compared to a loss before interest and tax of RM12 million in the same period last year, aided by stronger cocoa butter margins at Bunge Loders Croklaan.

There are now eight ‘buy’, nine ‘hold’ and two ‘sell’ calls on IOI Corp, with CIMB Securities deciding to maintained its ‘buy’ rating with a target price of RM4.51, implying potential upside from earnings-accretive mergers and acquisitions given the group’s low net gearing of 8%.

Meanwhile, Kenanga Research nudged its target price slightly higher to RM4.35 after upgrading its FY2026 and FY2027 earnings forecasts on stronger-than-expected downstream margins. 

However, it kept its ‘market perform’ call intact, noting that the current share price remains within 10% of its revised valuation. 

IOI Corp ended Wednesday trading on Bursa Malaysia a tad higher at RM4.04, giving the company a market value of RM25 billion.

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