10/11/2008 (Business Standard) - IOI Corp (1961), the world’s second- biggest palm-oil producer, gained for the first time in three days in Kuala Lumpur trading after profit beat some estimates and analysts said the stock is undervalued.

Malaysia-based IOI, which has dropped 60 per cent this year, gained as much as 3.9 per cent to RM3.24. It traded at RM3.20 ringgit at 10.54 am local time.

IOI’s first-quarter profit sank 36 per cent to RM290.5 million after palm-oil prices fell from a record and the company ran up foreign-exchange losses.

Still, results beat forecasts at ECM Libra Capital and OSK Research as the plantation company locked in buyers for palm oil at more than the market price. 

“Earnings were held up by forward sales,” said Alvin Tai, an analyst at OSK in Kuala Lumpur with a “trading buy” rating on IOI. The stock has suffered “the worst of the selling.”

Palm oil, used as an edible oil and as a biofuel, has plunged 54 per cent in the past six months on the Kuala Lumpur stock exchange on concern a worldwide economic downturn will cut demand for commodities. - Bloomberg