PETALING JAYA: TSH Resources Bhd’s first-half 2025 revenue aligned with Berjaya Research Sdn Bhd’s expectations, but earnings came in stronger than anticipated, making up 72.5% of the research firm’s prior 2025 core Patami (profit after tax and minority interests) forecast.
The research firm said the key deviation on the bottom line was mainly due to better contributions from the palm products segment, lower finance costs and stronger contributions from its associate and joint ventures.
On a quarter-on-quarter comparison, TSH Resources’ revenue fell 2.4% to RM268.8 million from RM275.3 million, weighed down by a 21.8% drop in fresh fruit bunch (FFB) production due to seasonal factors and a decline in the average selling price for crude palm oil (CPO) to RM3,695 per tonne from RM4,193 per tonne in Q1 of 2025.
Nevertheless, core Patami rose 4.5% to RM44.8 million from RM42.8 million, supported by a lower effective tax rate.
Year-on-year, TSH Resources’ revenue rose 6.4% to RM268.8 million from RM252.5 million, driven by a higher average selling price of palm kernel (PK) at RM3,315 per tonne and increased sales of both CPO (+5%) and PK (+3%).
However, core Patami, excluding unrealised foreign exchange and fair value adjustments on biological assets, declined 4.5% to RM44.8 million from RM46.9 million, mainly due to higher losses from the wood segment.
Berjaya Research has revised its 2025 and 2026 Patami forecasts upwards by 35% and 34%, respectively, to reflect higher average selling prices for CPO and PK.
“Consequently, we maintain our’ Buy’ recommendation on TSH Resources with a revised target price of RM1.37, supported by its strong fundamentals and growth potential, while noting that further upside could come from new plantings, improved gearing, and recovery in other segments, though risks remain from weaker palm oil demand, rising production costs, weather conditions, and tax policy changes,” Berjaya Research said in a note.
Berjaya Research expects CPO prices to remain firm above RM4,000 per tonne for the rest of the year, supported by tighter supply from Indonesia, sustained biodiesel demand and stable import needs from key markets such as India and China, with India’s recent cut in CPO import duties likely to further boost offtake.
However, any near-term upside may be capped as Malaysia’s palm oil inventory remains elevated above two million tonnes, reflecting slower drawdowns.
For TSH Resources, ongoing replanting is expected to enhance FFB yields over the next three years, while its planted area is projected to expand to about 50,000 hectares, positioning the group for steady production growth and stronger economies of scale in the medium term, the research firm said.