El Niño was supposed to be good for palm oil. Hot, dry weather squeezes supply and lifts prices, which was our argument in June. It also dries out Indonesian peatland until it burns. Look up in Singapore and you can see the problem. Smoke from Indonesian fires has hung over the island for weeks, and it has now reached palm oil stocks.
A Greenpeace report on 5 October linked two Singapore-listed palm oil companies, First Resources and Bumitama Agri, to concessions where fires were detected. Since then SGX RegCo has engaged with the listed companies with Indonesian plantations, and Singapore’s National Environment Agency (NEA) has issued preventive notices to ten Indonesian companies.
Caught in the middle are six SGX-listed palm oil companies, and most of their shares have been sold down. Yet the businesses are not the main problem. All six reported higher profits for FY2025, and CPO prices are still firm. So the market is not asking whether the business is broken. It is likely asking how much regulatory and reputational risk was not fully priced in.
What the Regulators Have Done
SGX RegCo has engaged with listed companies with Indonesian plantations, asking whether the fires have affected their operations and whether their activities may have contributed to the haze. It has warned that it will take appropriate regulatory action where companies fail to meet their disclosure obligations.
On 16 October, NEA said it would send Preventive Measure Notices to seven Indonesian companies under the Transboundary Haze Pollution Act (THPA), over fires in Sumatra. The notices tell them to put firefighters on their land, stop any burning and send NEA a plan to put out fires and stop them recurring. The seven are Bumi Andalas Permai, Bumi Mekar Hijau, Paramitra Mulia Langgeng, Sumatera Alam Anugerah, SBA Wood Industries, Hutan Lestari Raya and Bangkanesia.
On 19 October, NEA added three more companies, over fires in Kalimantan. They are Buana Megatama Jaya, Mananjung Hayak and Baratama Putra Perkasa. The notices are preventive, and NEA says it remains committed to enforcement action against companies found responsible.
Three of the ten supply wood fibre to Asia Pulp & Paper (APP), according to the Singapore Environment Council. They are Bumi Andalas Permai, Bumi Mekar Hijau and SBA Wood Industries, from South Sumatra. We did not find a public link between any of the ten and the six SGX-listed companies in this article.
Buyers are being drawn in too. On 18 October, the Singapore Environment Council put temporary restrictions on APP’s Green Label certification and told certified companies to declare whether they buy from any of the first seven. In 2015, a similar restriction was followed by supermarkets pulling APP products from their shelves.
On 19 October, Senior Minister K Shanmugam said Singapore would use all available legal and regulatory measures and, if necessary, amend or introduce laws urgently. He warned that this could hurt companies’ access to financing and said some fire and smoke-source points seem to be associated with First Resources and Bumitama. For investors, this could add a legal and governance overhang to stocks that have mostly traded on the CPO price.
A Primer on Palm Oil and the Haze in Late 2026
Palm oil producers have had a good run. CPO averaged about RM4,300 per tonne in 2025, slightly above 2024. Indonesia’s B40 biodiesel mandate absorbed large volumes of domestic supply, and little new land is being planted worldwide. In September, the Malaysian Palm Oil Council said it expected prices to stay above RM4,700 per tonne until at least October, and possibly for the rest of 2026. Futures have since eased to about RM4,500.
The same weather that supports prices could now be the industry’s biggest liability. El Niño has brought a long dry spell to Indonesia, and dry peatland in Kalimantan and Sumatra burns easily. By 16 October, Singapore had recorded 12 straight days of unhealthy PSI, the longest stretch since the 2015 crisis, and Environment Minister Grace Fu has said Singapore should prepare for prolonged haze until November.
What the Companies Say
All six SGX-listed companies have put out statements on SGXNet. Each says it has a no-burning policy, and most say the fires have not hurt, or will not hurt, their business materially. Several say fires started outside their concessions and spread in. First Resources and Bumitama added that a hotspot inside a concession does not by itself show who lit the fire, and dispute that their operations started the fires. Only Kencana said Indonesian authorities have opened a preliminary inquiry into one of its subsidiaries.
The question for investors is therefore less “who started the fires?” than “who can show they are not involved?”
Six Stocks, Six Stories: First Resources Flashes a Warning Sign
We look at each on its results, its dividend and how exposed it is.
First Resources (EB5) has some of the strongest results of the group and an awkward exposure. FY2025 was a record year.
- Revenue rose 59.9% to US$1.66 billion.
- EBITDA rose 54.1% to US$614.9 million.
- Underlying net profit rose 56.5% to US$358.2 million.
- CPO output jumped 29.8% to 1.3 million tonnes, helped by the ANJ acquisition.
The problem is that the estate Greenpeace flagged, PT Kayung Agro Lestari in West Kalimantan, came with ANJ, the company First Resources bought in May 2025, a deal that added about 25% to its planted area. First-half 2026 kept the momentum, helped by a full six months of ANJ against two a year earlier, with revenue up 44.5%, underlying net profit up 42% and an interim dividend of 8 cents, up from 4.5 cents. At S$3.78, its FY2025 dividend of 14.70 cents gives a yield of about 4%. In our view, the business case is intact, but the stock will likely trade at a discount until the haze clears up.
Bumitama Agri (P8Z) is, in our view, the best-run mid-cap of the group, and the haze has added a governance question to an otherwise clean story.
- FY2025 net profit rose 23.0% to IDR 2.8 trillion.
- Its EBITDA margin rose to 28.8%.
- Net profit has grown about 13% a year since 2021.
- It declared 9.35 Singapore cents for FY2025, up 41%, an all-time high. That is a yield of about 5% at recent prices.
- First-half 2026 net profit rose 44%, and the interim dividend rose to 4.10 cents.
Production is running well ahead of last year, and Indonesia’s B50 biodiesel programme began in July. Greenpeace linked an affiliate to the fires, and the company disputes that its operations started them. Whether the yield is a bargain depends on that holding up.
Golden Agri-Resources (E5H) is the biggest planter of the group, with about 530,000 hectares. It earned about US$400 million in net profit on revenue of nearly US$13 billion in 2025 and raised its final dividend by 18%. First-half net profit rose 4%, though EBITDA slipped 2%. So far GAR has not been named in NEA’s notices or by Greenpeace, so its main risk looks like tougher rules for the whole industry, not direct liability. Even so, its shares have fallen nearly as much as First Resources’ since 9 October.
Wilmar International (F34) is the least exposed of the group in earnings terms. Plantations and sugar milling made only about 13% of its first-half pre-tax profit. In FY2025 it made core net profit of about US$1.3 billion, up 10%, on revenue of about US$70 billion. First-half core net profit rose 10%, and the interim dividend rose to 5 Singapore cents, from 4 cents. Wilmar says fires were detected on small parts of some of its own Indonesian concessions, started outside them and were put out quickly. Its bigger haze exposure is its supply chain, since it buys from hundreds of third-party mills.
Indofood Agri Resources (5JS) reported first-half net profit up 32%, but core profit slipped 2% and EBITDA fell 4% on higher palm production costs. FY2025 profit after tax rose about 19%. The company says the fires have had no material impact on its business so far.
Kencana Agri (BNE) is the smallest name in the group, and it only returned to profit in 2024.
- CPO production rose 14.6% to 187,295 tonnes in FY2025.
- Profit after tax was US$18.4 million.
- It proposed a dividend of 1.5 Singapore cents.
- First-half 2026 net profit rose about 21%, though margins narrowed as it spent more on upkeep and bought in third-party fruit.
Kencana is the one company here with a live inquiry. Indonesian authorities have opened a preliminary inquiry into suspected land clearing by burning at a subsidiary in North Kalimantan, which the company says did no land clearing there. It expects no material impact. Kencana is also the most indebted of the group, with net debt at about 1.8 times equity, so it has less room to absorb legal costs if the inquiry leads to any.
First Borneo Plantations, the third company in the Greenpeace report, is privately held, so it is not an investable name. It had not responded to media queries when the story broke.
What the Market Is Pricing In
Regional palm oil stocks fell together on 16 October, including Indonesian and Malaysian planters, while the Singapore market barely moved. That points to a sector-wide repricing of fire and regulatory risk, not a verdict on any one company. It also came after a big run. At their September peaks, First Resources and Kencana had each more than doubled this year and Bumitama had risen more than 80%. All three had come off those highs before the haze sell-off began. Even now they are up about 80%, 110% and 30%. Not every planter joined the rally. GAR and Indofood Agri are down for the year, so the gains at risk sit mainly with these three.
We have not seen earnings forecasts being cut. If anything, a drier El Niño year could mean less fruit in six to nine months and higher CPO prices. What the market is likely pricing is the risk of fines, selling by ESG funds and losing customers.
Is This the End of the Palm Oil Rally?
For now, regulatory worries are weighing on the shares, and the rally will likely stall.
The factors behind the rally are still in place. Supply growth is marginal, trees are aging, little new land is being planted and biodiesel demand is rising now that B50 has begun. El Niño may tighten supply further in 2027. These producers’ cash costs are low enough to stay profitable at most plausible prices.
What has changed is the cost of operating in Indonesia. In 2015, NEA issued notices to six companies. Investigations into four of them were still ongoing more than a decade later, and no fines have been imposed. That record suggests THPA enforcement is slow. This time, however, the government has said it will change the law if it has to, and SGX RegCo is making disclosure itself the compliance test. A company that cannot prove its estates are clean may be judged on its disclosure, even before any court case.
The more plausible risk is therefore a prolonged valuation discount rather than an earnings collapse. None of that should wipe out profits, but it can keep named stocks cheap for longer than the yield alone would justify.
Whether these prices are good value or a value trap will depend on three things over the coming weeks. One is how quickly the hotspots die down when the winds change. Another is what Singapore actually does next, whether that is new laws, findings against named companies or the outcome of Kencana’s inquiry. The third is whether CPO holds up. We prefer to stay away until the sky clears, even though the businesses look intact. When it does, Wilmar has the least plantation exposure and Bumitama offers a yield of about 5%.
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