Thus far, RHB notes that spot CPO prices have moderated from RM4,600-RM4,800/tonne in 1Q2025 to a low of RM3,780 in May, only to bounce back to RM3,900-RM4,100 currently. The decline was mainly driven by geopolitics in the light of US trade tariffs, wars and crude oil prices falling as a result, all of which pushed CPO prices in the same direction.
"We highlight that the correlation between CPO prices and crude oil prices surged to 0.47 in Apr 2025 from -0.6 in 1Q2025, and subsequently rose further to the current levels of 0.68, due to more geopolitical risks," says RHB.
On the outlook, RHB expects CPO prices to remain volatile given the ever-changing geopolitical situation. Fundamentally however, global supply and demand will likely be more balanced in 2026, as supply improves, while demand should pick up given the more attractive relative prices, the firm believes.
"We roll forward our valuation to 2026 and lower our target P/E to 9x FY2026 (from 10x FY2025), after adjusting for its current
historical average," says RHB.
See also: Citi keeps ‘sell’ call on SGX but raises target price ahead of ‘well anticipated’ FY2025 results
As at 10.45am, shares in Bumitama Agri are trading at 76 cents, 11% lower ytd.
