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KUALA LUMPUR (Sept 25) — Malaysian plantation companies with sizeable operations in Indonesia are facing heightened regulatory uncertainty following Jakarta's new agrarian reform law, with SD Guthrie Bhd, Genting Plantations Bhd and Kuala Lumpur Kepong Bhd (KLK) identified as the most exposed, according to CIMB Securities.
The research house noted that the actual impact remains unclear because key implementation details have yet to be finalised. These include the maximum landholding limits for companies and affiliated entities, as well as how a provision requiring at least 20% of certain land to be allocated for agrarian reform and redistribution will be applied.
CIMB has therefore refrained from adjusting its earnings forecasts or the land bank assumptions of the plantation firms under its coverage, saying it views the situation as one of elevated regulatory uncertainty rather than an imminent loss of land or income. 'We do not expect an across-the-board 20% cut in existing land,' the research house said in a note on Friday.
Indonesia's parliament approved the Agrarian Reform Law on Tuesday, establishing a wider framework to address land ownership concentration, redistribution and long-running agrarian conflicts. The legislation also provides for a dedicated body reporting to the president to oversee implementation, supervision and conflict resolution.
Agrarian Affairs and Spatial Planning Minister Nusron Wahid said further details, including minimum and maximum landholding thresholds, would be set out through subsequent regulations. Earlier media reports, including by Bloomberg, flagged broader risks to Indonesia's plantation and property sectors, while CIMB's latest assessment narrows in on the implications for Malaysian-listed plantation companies.
Among the names under CIMB's Malaysian plantation coverage, SD Guthrie, Genting Plantations and KLK carry the largest absolute plantation exposure to Indonesia. IOI Corp Bhd has a smaller relative footprint, while Johor Plantations Group Bhd, Ta Ann Holdings Bhd and Hap Seng Plantations Holdings Bhd operate entirely within Malaysia.
CIMB said the actual impact will hinge on the final landholding limits, whether the 20% rule applies to existing plantations and the mechanics of its implementation.
Bloomberg consensus data as of Friday pointed to broadly positive analyst sentiment on SD Guthrie and Genting Plantations, with views on KLK more divided. For SD Guthrie, 17 analysts had 'buy' calls and three had 'hold' calls, with a 12-month target price of RM7.68. Genting Plantations drew 10 'buy' calls and two 'hold' calls, with a target price of RM6.81. KLK had nine 'buy' calls, 10 'hold' calls and one 'sell', with a target price of RM24.57.
Separately, India's recent move to lower import duties on major edible oils could provide some support for crude palm oil (CPO) demand, although CIMB expects the benefit to Malaysian planters to be modest.
New Delhi cut the basic customs duty on crude palm oil and crude soybean oil to 5% from 10%, while scrapping the 10% duty on crude sunflower oil, effective Thursday. The Indian government said the measure was aimed at reducing import costs and easing domestic edible oil prices.
CIMB said the lower CPO duty should trim landed costs and underpin Indian palm oil imports, but warned that the larger tariff reduction for sunflower oil could make that commodity more competitive against palm oil and cap any demand uplift.
India accounted for roughly 17% of Malaysia's palm oil export volume in 2025. CIMB said the main benefit for Malaysian planters would likely flow through firmer CPO prices rather than a meaningful direct increase in export volumes.
CIMB maintained its CPO price forecasts at RM4,450 per tonne for 2026 and RM4,550 per tonne for 2027.
Source: KLSE Screener