MARKET DEVELOPMENT
Kenanga Reiterates \'Underweight\' On Plantation Sector
Kenanga Reiterates \'Underweight\' On Plantation Sector
06/04/2013 (Bernama) - Kenanga Research has reiterated an "underweight' call on the plantation sector as it expects another earnings disappointment in May 2013.
"Despite our short-term bullishness on the crude palm oil (CPO) price, the consensus is still estimating a 2013 average CPO price of RM2,860 per metric tonne as compared to the average spot CPO price recoded of just RM2,324 per metric tonne in the first quarter this year.
"This should lead to another earnings disappointment and further pressure the prices of plantation stocks," it said in a research note, Friday.
On the supply side, Kenanga Research said the higher security level in Sabah may have caused some disruptions to the fresh fruit bunch (FFB) harvesting and transportation of CPO there.
"As for demand, exports to Europe may be affected by the unusually cold weather there in March 2013.
"Despite our short-term bullishness on the crude palm oil (CPO) price, the consensus is still estimating a 2013 average CPO price of RM2,860 per metric tonne as compared to the average spot CPO price recoded of just RM2,324 per metric tonne in the first quarter this year.
"This should lead to another earnings disappointment and further pressure the prices of plantation stocks," it said in a research note, Friday.
On the supply side, Kenanga Research said the higher security level in Sabah may have caused some disruptions to the fresh fruit bunch (FFB) harvesting and transportation of CPO there.
"As for demand, exports to Europe may be affected by the unusually cold weather there in March 2013.