PUTRAJAYA, Malaysia, Aug 20 (Reuters) - Malaysia's most valuableplantation firm, IOI Corp, said on Friday it would raise yearly palm oiloutput by more than 12 percent to meet strong demand from China and India,boosting profits.Higher Malaysian crude palm oil (CPO) prices of 1,500-1,600 ringgit($395-$421) a tonne are expected for the rest of the year and early 2005,added IOI group executive director Lee Yeow Chor."We expect our performance to be improved due to increases in our palmoil production, a continued favourable property market and a furtherenhancement of earnings from our downstream manufacturing segments," Leetold Reuters.IOI, which has a market value of $2.4 billion, derives about 60 percentof profits from its plantations. It also builds houses and has palm oilrefining operations.At 0911 GMT on Friday the Malaysian benchmark third-month palm oilcontract, November , was up 17 ringgit at 1,487 ringgit a tonne.Malaysian third-month CPO prices have fallen by slightly more than 10percent since the start of 2004, hitting a nine-month closing low of 1,391ringgit in mid-July.Analysts polled by Reuters forecast a 20 percent rise in IOI's netprofit for the year through June 2005 to 843.15 million ringgit, 70.40cents per share.Lee declined to give his own forecast but investors are also bullish.This year IOI shares have risen 5.8 percent versus a 2 percent gain forthe benchmark Kuala Lumpur Composite Index which has a market value of$105 billion.IOI shares closed up 1.9 percent at 8.15 ringgit on Friday.

PRODUCTION RISINGLee said IOI would raise its yearly CPO production of 650,000 tonnes bymore than 12 percent from next year to meet growing demand from China,India, the European Union, the United States and the Middle East.That suggests output of at least 728,000 tonnes next year, about 6percent of Malaysian production."As a whole, world demand is always growing in line with populationincrease," said Lee, a London-trained lawyer and former magistrate.The 38-year-old is the eldest son of IOI founder and Malaysian tycoonLee Shin Cheng.Other regional producers are also raising CPO output amid surgingdemand from China and India.Indonesia's PT Astra Agro Lestari Tbk said in May it planned to produce720,000 tonnes of CPO this year, up 15 percent from 2003.IOI shares have a price-to-earnings ratio of 12.46 times, similar toAstra Agro's 12.3 times.Lee said warmer global weather and reduced availability of arable landworldwide would squeeze palm oil supplies.International edible oil prices have dipped in recent months and thetrend is expected to continue due to a big jump in global oilseeds output.Malaysia, the world's largest palm oil producer, saw CPO prices reboundthis week on expectations of higher seasonal demand during festivals likeIndia's Diwali and the Muslim Eid-al-Fitr in November.Lee said IOI would add to its current plantation area of 150,000hectares in Malaysia, and did not rule out making acquisitions ofIndonesian plantations in the future.