15 April, 2003 - PRICES of crude palm oil futures (CPO) are expected toaverage RM1,500 a tonne next year as a result of the continuous squeeze inglobal supplies of edible oils and fats.

Avenue Securities Sdn Bhd said CPO futures averaged RM2,377.50 a tonne in1998, compared with RM2,004 for the first 14 days of this month.

The futures prices are projected to be firm throughout 2005, averagingRM1,500 a tonne, the research house added.

It said that companies such as IOI Corp Bhd, IOI Oleochemical IndustriesBhd, Kuala Lumpur Kepong Bhd and PPB Oil Palms Bhd will benefit from thestrong prices.

Avenue Securities has given the sector an overweight recommendationbecause the price earnings of 13 times is below the current marketevaluation of 16 times.

The research firm accorded IOI Corp a higher price-earnings ratio of 16times to reflect the company’s earnings superiority, well-diversifiedearnings base and efficient management team.

PPB Oil Palm has been accorded a price-earnings ratio of 13 times to takeinto consideration the impact of the volatility of CPO prices on itsearnings.