Hot Stocks Plantation stocks rise after govt said CPO prices will improve

by **Cals** Wed 20 Nov 2013, 18:48

Hot Stocks Plantation stocks rise after govt said CPO prices will improve

Business & Markets 2013

Written by Jeffrey Tan of theedgemalaysia.com

Wednesday, 20 November 2013 15:54

KUALA LUMPUR (Nov 20): Most plantation stocks rose after the Government said yesterday crude palm oil average selling price (CPO ASP) will rise to RM2,609 per MT next year as production falls.

The plantation index on Bursa Malaysia rose to 8,999.47 points after it climbed 25.61 points or 0.29% at 3.30pm. It earlier hit higher at 9,074.15 points.

On the stock exchange, Chin Teck Plantations Bhd, Innoprise Plantations Bhd and Batu Kawan Bhd were top gainers in afternoon trades.

At 3.30 pm today, Chin Teck rose 14 sen or 2% to RM RM9.45 while Innoprise rose 11 sen or 8% to RM1.50. Batu Kawan rose 10 sen or 0.5% to RM20.22.

Share prices of big plantation firms such as Felda Global Ventures Bhd and IOI Corporation Bhd also rose.

FGV rose 2 sen or 0.44% to RM4.54 while IOI Corp rose 8 sen or 1.42% to RM5.73.

Earlier in morning trades, TSH Resources Bhd was also a top gainer. It rose as much as 5.86% on the back of its strong earnings for the third quarter ended Sept 30, 2013.

In a note, Affin Investment Bank Research noted that the Government had said CPO ASP would improve, underpinned by higher demand, RM300 per MT discount to soybean oil and the superior quality of palm oil.

CPO ASP was RM2,328 per MT in the first 10 months of this year, according to official data.

SJ Securities Sdn Bhd said it considers upgrading the sector’s rating if CPO prices breaches RM2,700 per MT.

Although maintaining ‘neutral’ for the plantation sector, the research house said: “We remain positive on selected mid-cap growth stocks with young tree age profile, such as TSH, SOP, IJM Plantations and TH Plantations.”

“We expect the plantation index to continue uptrend momentum in medium term on the back of anticipated overall stronger results next quarter.”

Affin IB research analyst Ong Keng Wee said: “Next year’s ASP forecast (RM2,609 per MT) is however lower than our assumption of RM2,700 per MT and probably no higher than the consensus average.”

While maintaining ‘neutral’ rating for the sector, Ong is recommending ‘add’ call for Sime Darby, IOI Corp and FGV with target price (TP) of RM10.30, RM5.60 and RM4.98 respectively.

For KLK and Genting Plantations, he has given a ‘reduce’ recommendation with TP at RM19.46 and RM8.30 respectively.