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Top Calls
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Sector update � Plantation (NEUTRAL,
downgrade)
CPO futures dipped below RM2,0000/MT after a series of bad news. But we expect a price recovery, stronger in 2015 and 2016. Nevertheless, our previous 2015/16 forecast of RM2,850/MT looks ambitious now. We hence cut our CPO ASP assumption to RM2,600/MT in 2015 and RM2,700/MT in 2016/17. Following the cut in CPO ASP assumptions, we cut EPS forecasts and target prices for the plantation stocks under our coverage. With 3 REDUCE, 4 ADD and 1 BUY stock ratings, we downgrade the sector rating OVERWEIGHT to NEUTRAL. We continue to believe in the sector's bright long term prospects. Investors willing to look beyond 2H15 will see reasonable returns to investments. At current prices, our top picks for the sector are IJMP, KLK and SIME (which may soon list its Motor division). Timber stocks, Tan Ann and Jaya Tiasa's SOP-derived target prices have also been cut but stock ratings however remains unchanged at BUY and REDUCE.
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Other Calls
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Economy � ASEAN Outlook � Weekly Wrap (29Aug � 4Sep 2014)
- Spore�s PMI fell to 49.7 in August, signals lower growth
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