SD Guthrie's 2Q Upstream Earnings Could Improve on Lower Costs — Market Talk

SD Guthrie's upstream earnings are expected to rebound strongly in 2Q on lower maintenance costs and as yields improve with seasonal factors, Citi analyst Gan Huan Wen says in a note. The weaker 1Q upstream performance was mainly due to higher upkeep expenses brought forward to take advantage of the low-production season and dry weather, he notes. However, downstream margin pressure is expected in 2Q as higher feedstock costs become harder to pass on amid softer demand, he says. The company expects only a 5% impact on production costs if crude oil stays near $100 a barrel, while fertilizer costs are largely locked in for the rest of 2026, he adds. Citi maintains a buy rating on SD Guthrie and keeps its target price at 7.60 ringgit. Shares closed at 6.20 ringgit. (yingxian.wong@wsj.com)