11/09/2012 (The Star) - CIMB Equities Research is maintaining its Trading Buy rating on the regional plantation sector as it expects crude palm oil (CPO) prices to rise in the medium term.

It said on Tuesday the CPO price rise would be due to concerns over a potential soybean crop loss in the US Midwest with the on-going dry weather and rising risk of El Nino hitting the yield of palm oil crops.

“We would turn more positive on the sector if an El Nino is confirmed with a moderate-to-strong intensity,” it said.

CIMB Research continued to favour the Indonesian planters because of their attractive valuations against their regional peers, and it viewed that they would stand to claw back export tax benefits from the refiners in the medium term.

“We maintain our Trading Buy call on Singapore planters and Neutral rating on Malaysian planters. In our plantation sector universe, our top picks are Astra Agro in Indonesia, Sime Darby in Malaysia, and Indofood Agri in Singapore,” said the research house