Hot Stocks Plantation firms roar; KLK, BLD, PPB lead gainers

Business & Markets 2013
Written by Ho Wah Foon
Tuesday, 10 December 2013 16:18
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KUALA LUMPUR (Dec 10): Plantation counters, led by Kuala Lumpur Kepong
Bhd and PPB Group Bhd, continued to charge after the official palm oil data
show that palm oil production heading for a decline though stocks for
end-November had risen.
At 3.31 pm, KLK – the second top gainer – soared 44 sen or 1.8% to RM24.36,
BLD Plantation roared with rise of 35 sen or 4% at RM9.00 while PPB Group
gained 28 sen or 1.8% to RM15.32. The three counters were within the top ten
gainers.
Genting Plantations was up 14 sen or 1.3% at RM11.32, Sime Darby added 5
sen or 0.5% to RM9.64 while FGV rose 4 sen or 0.9% to RM4.60.
Malaysia's November palm oil end-stocks rose to their highest in eight months
as seasonally weaker output partly offset a drop in exports, according to
Reuters.
Data released by the Malaysian Palm Oil Board at noon today showed that output fell 5.6 percent to 1.86 million tonnes in November, a
steeper drop than expected.
However, exports also weakened more than expected, falling 8.7 percent to 1.52 million tonnes. The weaker exports pushed up
inventories in Malaysia -- up 7.2 percent from a month ago to 1.98 million tonnes, the highest since March.
In an immediate comment, JF Apex Securities said it has turned bullish on the plantation sector as it believes the low supply caused by the
monsoon floods would dent production going forward.
“In addition, the acceleration of biodiesel mandates in Malaysia and Indonesia, which would increase the consumption of CPO and keep
the palm oil inventory in check has added to optimism to the sector,” it said.
In an update on the plantation sector, Public Investment Bank has raised its forecast on average CPO prices to RM2,750 per tonne next
year, from an earlier estimate of RM2,550.
After revising its earnings outlook for the stocks under its coverage, it is now calling “overweight” on the plantation sector.
“The steady demand from major consuming countries coupled with stronger domestic consumption in Malaysia and Indonesia could further
ease the inventories level to a more level,” said PublicInvest in its report.