Quick Summary Nvidia posted a 75.2% adjusted gross margin , among the highest in Big Tech AI hyperscalers plan US$650B capex in 2026 , much flowing to Nvidia Rivals like AMD, Alphabet and Amazon are gaining traction Long-term margin sustainability remains the key investor question Margins Steal the Show While investors already expected strong demand, NVIDIA Corp surprised with something even more impressive: Adjusted gross margin of 75.2% , the highest since late 2024 — and management expects similar levels next quarter. For a nearly US$5 trillion company , that margin signals extraordinary pricing power in AI hardware. AI Spending Wave Still Intact AI hyperscalers are forecasting ~US$650 billion in capex for 2026 , up roughly 60% from 2025. Nvidia remains the primary beneficiary as demand for data centre GPUs continues to surge. But maintaining 75% margins depends on two big factors: 1️⃣ Supply Constraints Rising memory costs remain a ris...
Quick Summary
1HFY2026 core net profit up 21% YoY to RM795m
Plantation segment remains the key earnings driver (79% of PBT)
2HFY2026 profit may soften due to lower FFB output and weaker CPO prices
CIMB maintains ‘Buy’ with TP RM4.51, citing M&A potential
Earnings Momentum Still Intact
Shares of IOI Corporation Bhd remain supported by resilient earnings, although analysts caution that softer crude palm oil (CPO) prices may cap further upside.
For 2QFY2026:
Core net profit: RM405m
+4% QoQ
+3% YoY
1HFY2026 core net profit: RM795m
+21% YoY
53% of CIMB’s full-year forecast
Reported net profit for 1HFY2026 came in higher at RM898m, boosted by:
RM110.7m FX gains
Fair value gains on biological assets
Plantation Segment Drives Performance
The plantation division contributed 79% of pre-tax profit, with:
FFB output: +12.3% QoQ to ~874,000 tonnes
Unit cost: RM2,361 per tonne
Average CPO price: RM4,224 per tonne
Palm kernel price: RM3,449 per tonne
Despite softer year-on-year CPO prices, stronger volumes and better cost control helped cushion the impact.
Downstream & Associates Improve
Resource-based manufacturing swung back into profitability:
2QFY2026 EBIT: RM20m (vs RM5m last year)
1HFY2026 EBIT: RM104m (vs RM12m loss last year)
Improvement was supported by stronger cocoa butter margins at Bunge Loders Croklaan.
Associates contributed RM45m, adding to earnings stability.
Why 2H May Be Softer
CIMB Securities flagged several headwinds for 2HFY2026:
Seasonally lower FFB output
Weaker CPO prices
Stronger ringgit
High Malaysian stock levels
Delays in Indonesia’s B50 biodiesel rollout
While festive demand and palm oil’s discount to soybean oil offer some support, price upside looks capped.
Valuation & Analyst Calls
Current price: RM4.06
Market cap: RM25.5 billion
8 ‘Buy’, 9 ‘Hold’, 2 ‘Sell’ calls
CIMB:
Maintains ‘Buy’
Target price: RM4.51
Highlights low net gearing (8%) and potential earnings-accretive M&A
Kenanga:
Target price: RM4.35
Maintains ‘Market Perform’
Bottom Line
IOI Corp’s earnings momentum remains solid, underpinned by strong plantation output and improved downstream margins.
However, with CPO prices softening and macro headwinds building, near-term upside may be capped, shifting investor focus toward balance sheet strength and potential M&A catalysts.
Key Takeaways
Strong 1H earnings, plantation-led growth
Downstream margins improving
CPO price softness limits 2H upside
Balance sheet strength supports longer-term optionality
Comments
Post a Comment