Company Coverage
Kuala Lumpur Kepong (KLK MK): 3QFY26: Within Expectations; Synthomer Write-Down Masks Core Recovery
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
RM21.92
RM24.65
+12.5%
RM24.65
Analyst
Analyst
Malaysia Research Team
research@uobkh.comHighlights
- KLK's 3QFY26 net loss of RM1,344m follows a RM1,621m non-cash impairment on Synthomer plc. Excluding the impairment and the RM168m share of Synthomer's equity loss, core PATAMI was RM349m, +10.6% qoq and +5.0% yoy.
- 9MFY26 core PATAMI of RM1,047m (+27.9% yoy) makes up 67% of our full-year forecast and 80% of consensus estimates. We consider this within expectations, as 4QFY26 is the seasonal production peak and will capture the recent rise in CPO prices.
- Maintain BUY with an unchanged target price of RM24.65, pegged to 17x FY26F PE.
Analysis
Within expectations. Kuala Lumpur Kepong’s (KLK) 3QFY26 core PATAMI of RM349m rose 10.6% qoq and 5.0% yoy, lifting 9MFY26 core earnings to RM1,047m (+27.9% yoy). That makes up 67% of our full-year forecast and 80% of consensus estimates. The reported net loss of RM1,344m reflects a RM1,621m impairment on the group’s investment in Synthomer plc, written down to a recoverable amount of RM190.1m from a carrying value of RM1,811.4m. The write-down follows a prolonged gap between Synthomer’s market value and its carrying amount, its market capitalisation remaining below that carrying value, and an earnings recovery that has progressed more slowly than anticipated. The charge is non-cash and leaves operating cash flow, liquidity, debt servicing and dividend capacity untouched.
Highlights
- KLK's 3QFY26 net loss of RM1,344m follows a RM1,621m non-cash impairment on Synthomer plc. Excluding the impairment and the RM168m share of Synthomer's equity loss, core PATAMI was RM349m, +10.6% qoq and +5.0% yoy.
- 9MFY26 core PATAMI of RM1,047m (+27.9% yoy) makes up 67% of our full-year forecast and 80% of consensus estimates. We consider this within expectations, as 4QFY26 is the seasonal production peak and will capture the recent rise in CPO prices.
- Maintain BUY with an unchanged target price of RM24.65, pegged to 17x FY26F PE.
Analysis
Within expectations. Kuala Lumpur Kepong’s (KLK) 3QFY26 core PATAMI of RM349m rose 10.6% qoq and 5.0% yoy, lifting 9MFY26 core earnings to RM1,047m (+27.9% yoy). That makes up 67% of our full-year forecast and 80% of consensus estimates. The reported net loss of RM1,344m reflects a RM1,621m impairment on the group’s investment in Synthomer plc, written down to a recoverable amount of RM190.1m from a carrying value of RM1,811.4m. The write-down follows a prolonged gap between Synthomer’s market value and its carrying amount, its market capitalisation remaining below that carrying value, and an earnings recovery that has progressed more slowly than anticipated. The charge is non-cash and leaves operating cash flow, liquidity, debt servicing and dividend capacity untouched.
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
RM21.92
RM24.65
+12.5%
RM24.65
Analyst
Analyst
Malaysia Research Team
research@uobkh.comIMPORTANT NOTICE - DISCLOSURES AND DISCLAIMERS
This report is provided subject to, and must be read together with, the full Disclosures / Disclaimers available at this link, which are incorporated by reference into this report. In particular, this report is intended for general circulation and informational purposes only and does not constitute personal investment advice or a recommendation to buy or sell any investment product or security. You should independently evaluate the information and, where necessary, seek advice from a qualified financial adviser regarding the suitability of any investment. Analyst certifications required under applicable regulations, including SEC Regulation AC (where relevant), are included in this report. By accessing, receiving or using this report, you acknowledge that you have read, understood and agreed to be bound by the Disclosures / Disclaimers, as may be amended, supplemented or updated from time to time.
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