01 October 2001 (Business Times) - LOCAL plantation companies are expectedto show improved third quarter earnings this year, mainly due to thedramatic improvement in crude palm oil (CPO) prices during the period.CPO prices breached RM1,000 per tonne on July 12, after languishing atbetween RM600 and RM700 a tonne for 13 months.A Business Times poll on four research houses which monitor plantationstocks revealed that the market expects plantation companies to show animprovement in their third quarter results.“Companies such as Golden Hope Plantations Bhd, Kuala Lumpur Kepong Bhdand IOI Corp Bhd would have capitalised on the good prices by selling asfar forward as they can,” one plantation analyst pointed out.Despite these cheerful prognostications, the Kuala Lumpur Stock Exchange(KLSE) Plantation Index showed a smaller improvement during the timecompared to the KLSE Composite Index (KLCI) and the KLSE Emas Index.From June 28 to September 28 this year, the Plantation Index appreciatedby only 4.21 per cent compared to KLCI’s 4.84 per cent and the Emas Index’s 3.34 per cent.The Plantation Index last Friday closed 19.61 points up at 1427.73 whilethe KLCI increased 2.70 points to 615.34 points and the Emas Index ended1.03 points higher at 145.84.“Top performers would most probably be IOI Corp Bhd, Golden HopePlantations Bhd and Kuala Lumpur Kepong Bhd which account for a combinedweightage of 46 per cent on the Plantation Index,” said one analyst.Within the last three months, IOI was the best performing counter of the39 listed on the Plantation Index, with a price increase of some 28.37 percent, followed by PPB Oils Palms Bhd at 27.59 per cent, Kulim Malaysia at18.03 per cent and Mentakab Rubber at 15.38 per cent.“Most of these companies with the exception of Kumpulan Guthrie would havesold as far forward as possible,” he said.He added that nobody knows what kind of financial position Guthrie, whichis currently acquiring land in Indonesia, is in. The third largestplantation in the country, Guthrie suffered losses of RM24.5 million forthe first half of its financial year ending December 31 2001 compared withRM15.9 million of the same period previously due to lower palm oil prices.IOI Corp, currently in battle with Sime Darby Bhd for control over palmolein manufacturer Palmco Holdings Bhd, also saw profits for the financialyear ended June 2001 fall by 3.93 per cent to RM291.13 million from 303.03million previously.Cash-rich Golden Hope made a net profit of RM57.829 million for the finalquarter ended June 30 this year, from RM325.93 million in the previousfinancial year, translating into an earnings per share (EPS) of 5.46 sen.The consensus estimates for the group on the Multex Global Estimates wasRM86 million net profit with an EPS of 7.7 sen but despite falling shortof expectations this time round, hopes are high for its 2002 earnings witha net profit forecast of RM173.79 million and an EPS of 17.10 sen.For 2003, Golden Hope is expected to perform even better with a forecastnet profit of RM212.82 million and an EPS of 20.97 sen.The fly in the ointment is of course the terrorist attacks in the US,which has created a lot of uncertainty in the market, especially withregards to palm oil prices.One analyst remarked: “By right, events in the US should have no bearingon palm oil prices because edible oil is a necessity and not a luxury itemsuch as gold or crude oil.“People still need oil to cook, and the world’s population is still therewhich translates into demand,” said the analyst.He further said commodities are traded in US dollars, and since theringgit is pegged to it, any impact will be cushioned.“However, there is still a possibility that the world would fall into arecession which will result in weaker demand.“And concerns of palm oil shipments to Pakistan being disrupted maydepress prices further,” he said.Golden Hope ended 2 sen higher at RM3.12 last Friday with KL Kepong up 20sen to RM5.20. IOI remained unchanged at RM3.42, United Plantations gained2 sen at RM3.04, Austral gained 2 sen to close at RM2.50 and PPB Oil Palmsgained 6 sen at RM4.26.