26/10/2017 (Nikkei Asian Review) - KUALA LUMPUR (Oct 26) -- MIDF Research upgrades plantation sector rating to Positive, after raising 2018 average palm oil price assumption to MYR2900/MT (metric ton) from MYR2725/MT. House expects global palm oil consumption to increase by 4% in 2018, while production growth to slow down to +4.3%. Adds, Australia Bureau of Meteorology has activated its La Nina Watch yesterday with 50% chance of La Niña forming in late 2017, which usually causes floods and are positive for palm oil prices. "Coupled with labour shortage problem which is still affecting the industry, we expect palm oil price to surge to MYR3500/MT if a strong La Nina materializes," says house in investor note. Expects stronger earnings for planters in 3Q17 due to the increase in palm oil price by 3.3% and better palm oil production by 8.3% on year. Top Pick is IOI Corporation with target price of MYR5.50, on margin improvement, special dividend and lower gearing. Shares now +0.5% at MYR4.48, while Bursa Malaysia Plantation index +0.1% at 7933.50.

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