RHB Investment Bank Bhd (RHB Research) has issued a BUY call on Johor Plantations Group Bhd (JPG) after the plantation company maintained its strong financial momentum in the first nine months of 2024, reporting core net profits of RM172.6 million — a 69% increase year-over-year. The research house has raised JPG's target price (TP) to RM1.55 from RM1.50, reflecting a 24% upside potential.

With its upgraded TP based on 14 times forward price-earnings for 2025 and an ESG score of 3.2 out of 4, JPG's valuation remains compelling amid a bullish crude palm oil market environment.

While JPG foresees a slight moderation in monthly output through year-end, its management has upgraded its annual growth outlook to 11%-12% for FY24, with projections for continued expansion in the 10%-12% range for FY25.

For FY25, the company is negotiating its fertiliser contracts at an additional 10% reduction, leading the research house to adjust cost projections downward by 5%-10% for FY24-FY26.

RHB Research sees potential for continued growth, supported by an upstream-oriented earnings profile and a well-balanced cost structure.

The company's position as a pure plantation play, along with its attractive market valuation, supports an optimistic long-term outlook for JPG.