Palm oil-related stocks benefit from price increases, but stock performance has varied this year | Lianhe Zaobao

Last year, the global supply of crude palm oil tightened and prices rose, which is expected to boost the performance of palm oil-related companies listed in Singapore. The results of two companies that have already reported show positive outcomes. Analysts believe that favorable industry factors should continue the strong momentum from the first half of the year, but policy risks and specific challenges faced by individual companies, including Indonesia's changing regulations and land reclamation measures, will cast a shadow over the outlook, leading investors to remain cautious. The benchmark palm oil contract price is expected to average MYR 4,236.70 per ton in 2025, an increase of 4.8% compared to 2024. Wilmar and Golden Agri Resources, which released their results after the market closed on Thursday (February 26), both reported growth in revenue and core net profit for their fiscal year 2025, benefiting from higher palm oil prices and increased sales volume. Wilmar's stock price has risen 14% this year, while Golden Agri Resources' stock price has only increased by 1.75% during the same period. Wilmar's total revenue for fiscal year 2025 increased by 4.5% to USD 7.04157 billion (approximately SGD 8.89491 billion), and core net profit rose by 9.7% to USD 1.2776 billion. Although palm oil is only a part of Wilmar's three main businesses, it was the highest growth segment in terms of pre-tax profit for fiscal year 2025, increasing by 32% to USD 356.5 million. Management stated that this growth was due to rising palm oil prices and strong sugar sales in the first half of the year. Golden Agri Resources' total revenue for fiscal year 2025 increased by 18.7% to USD 12.95151 billion, primarily benefiting from rising international crude palm oil prices and increased sales volume, with basic earnings also rising by 25.4% to USD 521.9 million. Regarding the industry's outlook, Franky O. Widjaja, Chairman and President of Golden Agri Resources, stated: "Despite the current slowdown in economic growth, the long-term demand fundamentals remain solid, driven by global population growth and rising per capita GDP, increasing demand for renewable energy (especially Indonesia's strong biodiesel mandates), and the expanding applications of oleo-chemicals. Due to aging plantations and replanting plans, supply growth is expected to remain constrained. Additionally, uncertainties such as extreme weather, geopolitical developments, changes in global trade policies, and dynamics in the energy market are expected to continue causing industry volatility Extended Reading Golden Agri-Resources' net profit fell 8.5% to USD 240 million in the second half of the year Wilmar's net profit rose 38% to USD 816 million in the second half of the year Analysts from OCBC Bank Group noted in a report on January 14 that Indonesia's B50 biodiesel mandate requires a 50% blend of palm oil fuel with diesel, which is expected to drive up palm oil prices. Analysts from Macquarie Securities stated in a report on January 16 that although the B50 mandate has been delayed, the existing B40 program provides a "robust baseline" for palm oil demand, helping to support prices. Analysis: The global crude palm oil market is entering a "structural supply tightness phase" Analysts believe that the global crude palm oil market is entering a "structural supply tightness phase." The suspension of new plantation developments in Indonesia and Malaysia, declining yields from aging trees, and the emergence of the La Niña phenomenon are increasingly limiting supply growth. Additionally, the risk of regulatory fines in Indonesia for alleged unauthorized crop planting may affect investor confidence. Palm oil-related stocks that will soon announce their performance include Olam Group and Mewah International, both of which are scheduled to release their second half and full year results before and after the market closes on Friday (February 27). Furthermore, Bumitama Agri, First Resources, Kencana Agri, and Indofood Agri Resources are also expected to announce their second half and full year results before the market opens on Friday and within this week The stock prices of these six palm oil-related stocks have varied this year, ranging from a decline of 1.48% to an increase of 10.34%