Published: Friday January 11, 2013 MYT 8:43:00 AM
CIMB Research maintains Neutral on regional plantation sector
KUALA LUMPUR: CIMB Equities Research maintains its Neutral call on the regional plantation sector and its preference for the more liquid Singapore planters.
"We continue to like Wilmar as we expect the group's earnings to benefit from higher sales volumes for palm oil as well as better refining margins," it said on Friday.
CIMB Research said for exposure in expectations of a recovery in crude palm oil (CPO) prices in 1H13, it likes Golden Agri and Indofood Agri.
It pointed out that apart from the higher share liquidity against peers, these two stocks may be less affected by the CPO price decline compared to the pure planters due to their exposure to the branded cooking oil business.
Other top picks in the sector include Indonesian CPO plays BW Plantation, Sampoerna Agro, and SIMP.
To recap, Malaysia's palm oil stocks grew 2.4% in December to hit 2.63 mil tonnes, a record high for the fourth consecutive month. This was above its and consensus numbers as exports continued to lag Sabah state's stronger-than-expected output.
CIMB Research said the record high stocks coupled with the 25% dip in palm oil exports in the first 10 days of Jan 13 versus the corresponding period in Dec 2012, according to Intertek, could temporarily stall the recovery in CPO prices until the stubbornly-high palm oil stocks start to ease.