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CIMB "neutral" on plantations despite stocks fall
by Cals Tue 11 Jun 2013, 16:58
CIMB "neutral" on plantations despite stocks fall
Business & Markets 2013
Written by Kamarul Anwar of theedgemalaysia.com
Tuesday, 11 June 2013 15:12
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KUALA LUMPUR (June 11): Malaysia's palm oil inventory fell to an 11-month low in May but this does not warrant an upgrade on the PLANTATION []s sector, as far as CIMB Research is concerned.
The research house, which has retained its "neutral" rating on the sector, said in a note today the lower stocks level had already been partially priced in.
"We are 'neutral' on the sector and continue to be selective in our pick in this sector. We like First Resources Ltd for its well-managed estates and attractive valuations.
"Wilmar International Ltd remains one of our top picks as we expect the group's earnings to benefit from higher sales volumes for palm oil and improved crush margins.
"We also like IOI Corp Bhd in Malaysia as we feel investors have not fully priced-in the potential of its property business, which will be demerged and separately listed in the fourth quarter of this year," said CIMB analyst Ivy Ng Lee Fang in the note.
She said the research house expects crude palm oil (CPO) prices to remain firm in the near term with lower inventory and improving demand before Ramadhan festivities in July supporting the prices.
CIMB's Ng said the average CPO price for the month of May fell by 1% year-on-year to RM2,270 per tonne partly due to the stronger ringgit and slower palm oil exports for the first 15 days of May.
"Post-Ramadhan, CPO prices may correct as palm oil stocks could increase again as we enter the seasonal peak production period for palm oil in the later part of the fourth quarter, and higher soybean oil supplies from South America become more widely available," she said.
CIMB retains its average CPO price forecasts of RM2,530 per tonne for this year and RM2,700 for the next.
The research house has rated both Singapore-listed First Resources and Wilmar as "outperform", with target prices of S$2.22 (RM5.50) and S$3.74.
IOI received a "trading buy" rating, with a target price of RM6.
At 2:40 pm today, the FCPO futures contract for August 2013 fell RM11 to RM2,442 per tonne. Spot palm oil price also fell RM7 to RM1,779.
Business & Markets 2013
Written by Kamarul Anwar of theedgemalaysia.com
Tuesday, 11 June 2013 15:12
A + / A - / Reset
KUALA LUMPUR (June 11): Malaysia's palm oil inventory fell to an 11-month low in May but this does not warrant an upgrade on the PLANTATION []s sector, as far as CIMB Research is concerned.
The research house, which has retained its "neutral" rating on the sector, said in a note today the lower stocks level had already been partially priced in.
"We are 'neutral' on the sector and continue to be selective in our pick in this sector. We like First Resources Ltd for its well-managed estates and attractive valuations.
"Wilmar International Ltd remains one of our top picks as we expect the group's earnings to benefit from higher sales volumes for palm oil and improved crush margins.
"We also like IOI Corp Bhd in Malaysia as we feel investors have not fully priced-in the potential of its property business, which will be demerged and separately listed in the fourth quarter of this year," said CIMB analyst Ivy Ng Lee Fang in the note.
She said the research house expects crude palm oil (CPO) prices to remain firm in the near term with lower inventory and improving demand before Ramadhan festivities in July supporting the prices.
CIMB's Ng said the average CPO price for the month of May fell by 1% year-on-year to RM2,270 per tonne partly due to the stronger ringgit and slower palm oil exports for the first 15 days of May.
"Post-Ramadhan, CPO prices may correct as palm oil stocks could increase again as we enter the seasonal peak production period for palm oil in the later part of the fourth quarter, and higher soybean oil supplies from South America become more widely available," she said.
CIMB retains its average CPO price forecasts of RM2,530 per tonne for this year and RM2,700 for the next.
The research house has rated both Singapore-listed First Resources and Wilmar as "outperform", with target prices of S$2.22 (RM5.50) and S$3.74.
IOI received a "trading buy" rating, with a target price of RM6.
At 2:40 pm today, the FCPO futures contract for August 2013 fell RM11 to RM2,442 per tonne. Spot palm oil price also fell RM7 to RM1,779.
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