28/07/2008 (Bloomberg) - Investors should buy shares of Malaysia's Sime Darby Bhd. and Asiatic Development Bhd. because recent declines following a slump in commodity prices have made them attractive, JPMorgan Chase & Co said.

The two palm-oil producers offer better growth potential than rivals IOI Corp. and Kuala Lumpur Kepong Bhd., JP Morgan analyst Simone Yeoh wrote in a report today. Sime, the world's biggest listed planter, has fallen 13 percent in the past month, while Asiatic slumped 23 percent.

``The selldown of both Sime and Asiatic we believe has overshot fundamentals,'' Yeoh wrote. We ``maintain preference for companies which offer more than the crude palm-oil price as a catalyst as we head into 2009,'' she wrote.

A 15 percent retreat in crude oil from its July 11 record sparked a sell-off in Asian plantation stocks on concern lower prices will erode the appeal of palm oil as an alternative fuel. Palm oil prices fell 12 percent in the same period.

Palm prices are expected to remain weak as the industry heads into peak production season, Yeoh said.

Sime is trading at 19 times reported earnings, down from a high of 31 in January, according to data compiled by Bloomberg. Asiatic trades at 11 times earnings, compared with 20 on Jan. 4.

Sime, which also has businesses in property and autos, ``stands out among the larger caps as offering value, with potential catalysts'' from a November merger with smaller rivals, Yeoh wrote. The company's shares were among those Goldman Sachs Group Inc. recommended last week amid expectation palm oil prices may rise as much as 20 percent this year.