KUALA LUMPUR, May 20 — Maybank Investment Bank Bhd (Maybank IB) expected the yields of Malaysian oil palm planters to recover in financial year 2024 (FY2024) following the return of guest workers.

It said that some Malaysian-listed plantation companies reported lower fresh fruit bunches (FFB) and crude palm oil (CPO) yields in FY2022-FY2023 versus FY2020-FY2021 due to lack of guest workers harvesting and field maintenance following border closures during the Covid-19 pandemic.

"As labour shortages in Malaysia have been largely addressed with the gradual return of guest workers, we now expect yields to improve in FY2024-FY2025,” it said in a research note today.

Maybank IB said planters need to lift their yields to arrest the increase in unit cost.

"By our estimates, the sector’s average cost per mature hectare has risen by a compound annual growth rate (CAGR) of 4.5 per cent since FY2014 to RM10,921 in FY2023.

"However, its operating cost per CPO tonne has grown faster by 7.5 per cent CAGR over the same period to RM2,435 per tonnes in FY2023. Unit cost has risen faster in part due to falling CPO yields in recent years,” it said.

It said in the case of Malaysian-based planters, a higher domestic CPO prices also means higher windfall taxes, and higher Sabah and Sarawak sales taxes payable to the state governments add to overall cost pressures.

Maybank IB, which maintained a "neutral” rating on the plantation sector, said the ranking of upstream planters’ profitability does not necessary correlate with CPO yields achieved.

However, the bank also said if planters were able to lift their yields, the bottom line would be significantly enhanced.

"By our estimate, a 10 per cent increase in CPO yield will boost the proforma FY2023 core profit after tax and minority interests of planters under our coverage by nine to 132 per cent,” it added. — Bernama