IOI – the market is not rational

[i4value]

Over the past decade, IOI performance in terms of its ROA had been above than the sector upper quartile ROA. This is one of the better Bursa Plantation companies.

IOI achieved a 10-years peak in ROA in 2022. There seemed to be a corresponding market price uptrend. The ROA has since declined and so has market prices.

But when you look at the past 10 years ROA vs market price pattern, you can see that the current market price is lower than those from 2017 to 2021. In contrast the current ROA is better than those achieved from 2017 to 2021.


Is the market suggesting that the ROA in the coming year will decline? But if the fundamentals don’t suggest this, would this be an investment opportunity?

[i4value]

IOI: Strong Margins, Weak Growth

IOI Corporation may not be the fastest-growing name in the plantation sector. But beneath its quiet exterior lies a far more compelling story than most investors realize.

For nearly a decade, IOI has navigated one of the world’s most volatile commodity industries with a steadiness that few of its peers can match. Revenues may have plateaued, but margins, returns, and cash generation have quietly held firm through price booms, downturns, labour shortages, and structural shifts in global sustainability standards.

While others chased expansion, IOI doubled down on discipline. It focused on controlling fixed costs, sharpening operational efficiency, and building a downstream portfolio that delivers resilience when crude palm oil prices swing.

Its balance sheet has strengthened, its global footprint has deepened. And its integrated model has created advantages that are far harder to replicate than headline numbers suggest.

Yet despite this underlying strength, the valuation picture tells a very different story - one that raises a critical question for investors: Is IOI a defensive compounder hiding in plain sight, or a fully priced stock offering little margin of safety?