Business

Monday August 25, 2008

Three-day gains in CPO boost Tradewinds Plantation


By LAW KAI CHOW

PETALING JAYA: The share price of Tradewinds Plantation Bhd (TWPB) jumped 10.9% or 28 sen to RM2.84 on Friday and was the second biggest gainer in percentage terms in the KL Composite Index.

This is attributed to a third-day gain of 11.4% by the crude palm oil (CPO) futures, which ended the week at RM2,715 per tonne.

The CPO price has tumbled 11.4% this year and 35.7% from its all-time high in March, while TWPB’s share has fallen 28.3% this year.

Aseambankers said although TWPB’s net profit jumped 947% to RM87.2mil in the first half of its financial year ending Dec 31, it was still below the research unit’s expectation.

The group’s fresh fruit bunches (FFB) production was unexpectedly low at 252,800 tonnes, while the production cost was high at RM1,877 per tonne.

For second half this year, Aseambankers expects TWPB’s performance to improve due to seasonally high production months and locked-in sales of over RM3,000 a tonne.

However, its operating profit could be offset by higher fertiliser costs and weaker CPO prices.

In addition, there are concerns over the spillover negative effects of related transaction involving MMC Corp Bhd and the controlling shareholder of TWPB.

Aseambankers forecast the average CPO price for FY08 and FY09 would be about RM3,000 and RM2,500 a tonne respectively.

AmResearch, in a report, said it remained cautious on TWPB’s performance due to the uncertainties in the CPO prices.

It believes global demand growth could not catch up with supply, while the downward trend in CPO prices could be a further drag on vegetable oils.

AmResearch also said the Government expects biodiesel exports to rise 50% to 143,000 tonnes this year as the lower palm oil prices has made biodiesel viable aagain.

Citing Plantation Industries and Commodities Minister Datuk Peter Chin, the research house said this was subject to CPO meeting the demand for vegetable oils before the excess can be used in the energy sector.


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