Top Calls
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Sector Update � Plantation (OVERWEIGHT,
upgrade)
- Trending higher We believe the grounds for firmer prices in 2015 and 2016 are still in place. A wider soybean oil premium over CPO is supportive of CPO prices. Full implementation of the B10 mandate in Indonesia and Malaysia would consume up to 3.1m MT and 1.0m MT of CPO respectively, implying substantial permanent cut in palm oil inventory. Globally, palm oil stock-to-usage ratio in 2013/14 is expected to decline to its lowest level in four years while the stock-to-usage ration for oils and fats are expected to tighten. Edible and non-edbile demand from traditional importers are also expected to buy more as the global economy improves. We maintain our 2014E CPO ASP at RM2,700/MT but raise our 2015-16E forecast to RM2,850/MT (from RM2,700/MT). As we roll over our valuation to CY15E (from CY14E), and applying unchanged target PERs, we raise our target prices by 6-42% and upgrade the sector to OVERWEIGHT (from NEUTRAL). Our top picks are Sime Darby, Felda Global and IJM Plant.
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Other Calls
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| For important disclosures, please refer to the Disclosure section at the end of the individual linked research reports. |
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