Both plantation names under our coverage delivered solid performance in 1Q25, with AALI posted robust revenue growth of 46.3% YoY, supported by higher sales volumes of CPO and palm kernel and SSMS also reporting a 14.42% YoY increase in net profit to IDR276.90 billion, supported by efficient cost control and young plantation profile.

Indonesia’s CPO production rebounded in March 2025 to 4.81 million tons (+16.05% MoM), though 1Q25 output was still down –1.82% YoY, reflecting the lagging impact of El Niño. Domestic demand remained firm at 6.05 million tons for 3M25 (+6.0% YoY), backed by strong biodiesel uptake (+8.5% YoY). Exports also rose (+12.4% YoY), supported by stronger refined product volumes and a weaker rupiah.

We forecast CPO prices to hover around RM4,100–4,500/ton in 2H25F, driven by tight supply in Malaysia and continued domestic absorption in Indonesia. Demand from India is expected to strengthen amid restocking trends and lower import duties, while CPO’s pricing discount to soybean oil continues to support its global competitiveness.

We maintain our Overweight rating on the plantation sector, favoring names with strong production visibility, younger estates, and efficient cost structures. Key downside risks include CPO price volatility and unfavorable policy shifts that may impact margins.

By PHINTRACO SEKURITAS | Research
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