FW: AmBank Research - Plantation Sector: Inventory down 0.5% QoQ in May NEUTRAL, 12 Jun 2018

 

 

SECTOR FOCUS OF THE DAY

Plantation Sector: Inventory down 0.5% QoQ in May                       NEUTRAL

 

The Malaysian Palm Oil Board (MPOB) has released the country’s palm oil statistics for May 2018. Palm inventory in Malaysia eased for the fifth month in a row. Palm stockpiles in May edged down by 0.5% from 2.18mil tonnes as at end-April to 2.17mil tonnes as at end-May. The palm inventory of 2.17mil tonnes was above consensus estimates of 2.13mil tonnes for the month of May.

 

We believe that Malaysia’s palm inventory in May turned out to be higher than expected due to a drop in exports. Palm exports fell by 15.7% MoM to 1.29mil tonnes in May. While CPO production did decrease in May, the decline in exports was sharper.

 

We are NEUTRAL on the outlook for the plantation sector in 2H2018. We are assuming an average CPO price assumption of RM2,450/tonne for 2018F (2017: RM2,792/tonne). We expect plantation results in 2Q2018 to be unexciting due to flat CPO prices and production. Although we do not have any BUY recommendation, we would recommend Genting Plantation (GenP) for investors who would like exposure to the plantation sector. We have a fair value of RM10.75/share for GenP, which implies an FY19F PE of 25x. We like GenP for its low production cost per tonne in Malaysia and young oil palm trees in Indonesia. 

 

 

Others:

Sapura Energy: Pepulut discovery enhances SK408 viability          BUY

Magnum: FIFA World Cup could threaten ticket sales                      SELL

 

QUICK TAKE

Automobile Sector: Plans for a second Proton?  Neutral

 

 

RETAIL RESEARCH

Stocks On Radar: Kossan Rubber, Axiata Group, UCrest, HSS Engineering       

 

ECONOMIC HIGHLIGHT

Malaysia: IP reading supports our growth outlook

 

NEWS HIGHLIGHTS

RHB Bank: Targets RM100mil in SME loans over one year

IPO: Revenue Group plans to raise RM21mil

Daya Materials: ‘White knight’s rescue from PN17 not needed’

MAHB: Badlisham: New govt appears unopposed to DTFZ

 

 

 

DISCLAIMER:

The information and opinions in this report are prepared by AmInvestment Bank Bhd. The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of AmInvestment Bank Bhd. Bhd may from time to time have a position in or with the securities mentioned herein. Members of the AmBank Group Bhd and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgment as of this date and are subject to change without notice.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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