Hot Stock KLK turns loser from top gainer

by **Cals** Fri 24 Jan 2014, 16:29

Hot Stock KLK turns loser from top gainer

Business & Markets 2014

Written by Jeffrey Tan of theedgemalaysia.com

Friday, 24 January 2014 15:31

KUALA LUMPUR (Jan 24): Kuala Lumpur Kepong Bhd became the top decliner today, giving up almost all gains made yesterday after the Malaysian Palm Oil Board painted a brighter outlook for the palm oil sector.

MPOB yesterday projected palm oil inventory to decline to between 1.6 million tonnes and 1.8 million tonnes by end of the year. This compares to 2.0 million tonnes as at last year-end.

At 2.35 pm today, KLK fell RM1.12 or 4.5% to RM23.70, after gaining RM1.20 yesterday. It saw trades of some 165,000 shares.

Yesterday, KLK was top gainer but today it is the top loser on the exchange.

The plantation index also declined 112.31 points or 1.3% to 8,470.89 points.

Along with KLK were other plantation decliners: PPB Group Bhd and Genting Plantations Bhd.

Despite the plantation stocks poor performance today, Affin Investment Bank Research’s analyst Ong Keng Wee said the projected lower closing stock this year is positive news for crude palm oil.

“The three-month CPO futures traded higher to close at RM2,601 per metric tonne yesterday,” she said.

The research house said it maintains ‘neutral’ for the sector and keeps its 2014-2016 crude palm oil (CPO) average selling price forecast of RM2,700 per metric tonne.

Its top picks are Sime Darby Bhd and Felda Global Ventures Holdings Bhd. The stocks are maintained with ‘add’ call and target price of RM10.30 and RM4.95 respectively, it said.

“We expect futures prices to trade higher in the low yield months before trending lower as production surges again towards a peak in September, October and November this year,” said Ong.

“A key drag is still the projected record soybean production in South America.”

Meanwhile, RHB Investment Bank Bhd said from a technical perspective, the CPO futures should see continued buying support and firm upward bias, thus keeping the commodity above RM2,570 per metric tonne.

RHB IB’s research analyst Mohammad Ashraf Abu Bakar said: “Immediate support is seen at January 20’s high of RM2,585 per metric tonne, followed by RM2,570. However, strong resistance is expected at January 3’s low of RM2,625, followed by RM2,650.”