Despite stockpile rising above the 2m-tonne mark, OSK is not overly concerned as they believe that most of the contributing factors are already known and may have been factored into the decline in palm oil price from RM3,963 per tonne in Feb 2011 to a low of RM3,016.
OSK suspects that inventory may fall back promptly due to supply disruption in 2H. With palm oil now trading at a significant USD210 per tonne discount to soybean oil, there is plenty of room for palm oil price to move higher when supply disruption materializes in the months ahead. Maintain Neutral on the sector, with a positive near term outlook.
Below are the target prices and ratings for selected plantation stock.
| Stock | Price (RM) | Target (RM) | Market Cap (RM million) | Rating |
|---|---|---|---|---|
| Genting Plant | 7.85 | 8.26 | 5,972.1 | Neutral |
| IJM Plant | 2.75 | 3.14 | 2,188.7 | Neutral |
| KL Kepong | 20.76 | 20.55 | 22,207.6 | Neutral |
| Sime Darby | 9.15 | 8.47 | 54,986.6 | Sell |
| SOP | 4.25 | 5.22 | 1,869.0 | Buy |
| IOI Corp | 5.18 | 4.39 | 33,043.3 | Sell |
| Kulim | 3.75 | 4.77 | 4,644.3 | Buy |
| TSH | 3.14 | 3.83 | 1,308.4 | Buy |
| Glenealy | 5.80 | 6.40 | 669.1 | Buy |
Source : OSK Research