Hot Stocks Plantation shares fall in anticipation of weaker exports

by **Cals** Fri 14 Feb 2014, 11:13

Hot Stocks Plantation shares fall in anticipation of weaker exports

Business & Markets 2014

Written by Chong Jin Hun of theedgemalaysia.com

Friday, 14 February 2014 11:03

KUALA LUMPUR (Feb 14): Shares of Malaysian oil palm plantation firms like Genting Plantations Bhd, Kuala Lumpur Kepong Bhd (KLK), and PPB Group Bhd have fallen substantially today on anticipation of weaker exports for the country's palm oil.

At about 10.30am, Genting Plantations, the bourse's largest decliner, fell as much as 26 sen or 2.5% to RM10.22. KLK declined to RM23.50 after falling as much as 18 sen or 0.8% to RM23.34. PPB dropped to RM15.48 after declining as much as 20 sen or 1.3% to RM15.30.

Alliance Research Sdn Bhd analyst Arhnue Tan said the decline in the shares of plantation companies could be due to "the sector's outlook".

Tan told theedgemalaysia.com over telephone that investors could be wary of palm oil export outlook following weaker January 2014 external sales reported by the Malaysian Palm Oil Board (MPOB).

The MPOB said palm oil exports decreased 9.93% to 1.37 million tonnes in January 2014 from 1.52 million tonnes a month earlier. Meanwhile, crude palm oil (CPO) output declined 9.57% to 1.51 million tonnes from 1.67 million tonnes.

Palm oil inventory comprising CPO and processed palm oil, fell 2.63% to 1.93 million tonnes from 1.99 million tonnes.

Alliance's Tan said there were also concerns that importers might switch to rival products like sunflower and rapeseed oils. The move would not bode well for palm oil demand and prices.

Meanwhile, Kenanga Investment Bank Bhd wrote in a note today that it has a target price (TP) of RM10 for Genting Plantations shares. This comes with an "underperform" call for the stock.

Kenanga said Kuala Lumpur Kepong Bhd was fairly valued at RM26.10 while the TP for PPB stood at 16.60. Kenanga has "outperform" recommendations for both stocks.