RHB maintains overweight rating on Johor plantation sector amidst ESG gains

Analysts cited robust earnings growth driven by rising palm oil prices.

Johor’s leading plantation players, Johor Plantations Group (JPG) and SD Guthrie (SDG), are doubling down on sustainability and efficiency, according to RHB’s latest thematic research report.

Analysts maintain an overweight rating on the sector, citing robust earnings growth driven by rising palm oil prices, operational improvements, and new product diversification.

Following on-the-ground visits to JPG’s estates and SDG’s specialty fats plant, RHB analysts noted both companies stand out for their ESG practices and long-term value creation.

“JPG stands head and shoulders with the big boys when it comes to sustainability certifications,” the report said, highlighting JPG’s 100% RSPO and MSPO certifications, along with full traceability to mills and 82% to plantations.

At JPG’s Basir Ismail estate, mineral soil and internal mechanisation tools like the MB Raker and mini tractor grabber scissor lift (MTGSL) have boosted productivity and reduced labour reliance.

With a current mechanisation rate of 78.3% and labour-to-land ratio of 1:11, the group targets to hit 1:12.75 by year-end.

Despite challenges at the peat-soil-based Kuala Kabong estate, which yields lower output and is less machinery-friendly, analysts were upbeat. The estate forms just 3% of JPG’s total planted area.

JPG is also ramping up sustainable revenue streams. The group’s Sedenak mill features a biomethane plant and a palm fibre oil extraction (PFOE) facility, with the latter expected to generate MYR7m-8m annually from red palm oil sales.

“We are positive on the initiatives as they strengthen JPG’s ESG credentials,” the report said.

Meanwhile, SDG's downstream push is anchored by its Pasir Gudang refinery, which focuses on specialty fats like cocoa butter substitutes and bakery margarine, over half its 120,000-tonne annual volume.

“Differentiated products segment has contributed more to SDG’s downstream EBIT over the last six years… averaging 36% of EBIT,” analysts noted.

SDG also scored high in ESG performance, with 88% of its energy produced from renewables, well ahead of industry peers. Its participation in the Kerian Green Industrial Park further bolsters its green credentials.

“We believe SDG will stand to benefit from the higher cocoa prices globally,” said RHB, pointing to a potential sales boost once the post-fire repairs at the plant conclude by August 2025.

If you've been wondering whether SBR could work for your company — yes, probably.

A lot of the companies we partner with started as readers. They'd been following our coverage for a while, saw their own customers and competitors in it, and eventually asked the obvious question: could we do something with you? The answer is usually yes. The shape of it depends on what you're trying to do.

The options are broader than most people assume — thought leadership articles, sponsored content, industry summits across Southeast Asia, regional awards programmes, podcasts, and media placements in print and digital. Some partners use one channel; most use a mix. We figure out the right combination by starting with your brief, not with our rate card.

So if the question has been on your mind, here's the easy way to ask it.

We'll tell you honestly whether we can help, and how. It's a better use of everyone's time.

Book a meeting

| Or download the media kit (PDF)

240,000 senior readers quarterly in print Top 1,700 Singapore companies reached

7 markets across Southeast Asia