Singapore Stock Market News
Plantations - Counting on weather woes
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Publish date: Fri, 10 Feb 2012, 11:32 AM
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Factoring in the higher prices, we raise our FY12-13 EPS forecasts by up to 38% while upping target prices by as much as 45%. We upgrade Indonesian planters to Overweight and regional plantations to Trading Buy.
CPO price upgrade
We are raising our 2012-13 CPO price forecasts by 10-12% in light of persistent dry weather in the soybean and corn planting areas in South America throughout Jan 2012. This has resulted in irreversible damage to crop development and a 7-8% downgrade in soybean crop estimates from Brazil and Argentina. This will tighten global soybean oil supply, which is good news for CPO price. The weather risk and easing concerns over the euro debt crisis may boost demand and prices in 1H12.
We are raising our 2012-13 CPO price forecasts by 10-12% in light of persistent dry weather in the soybean and corn planting areas in South America throughout Jan 2012. This has resulted in irreversible damage to crop development and a 7-8% downgrade in soybean crop estimates from Brazil and Argentina. This will tighten global soybean oil supply, which is good news for CPO price. The weather risk and easing concerns over the euro debt crisis may boost demand and prices in 1H12.
Expect stronger 1H prices
We project CPO price to be stronger in 1H12 due to fears of a smaller soybean crop and a demand recovery. But supply prospects could improve in 2H as the likely favourable selling prices in 2Q should encourage US farmers to raise their plantings.. This and better weather prospects following the end of La Nina may dampen price prospects later in the year.
We project CPO price to be stronger in 1H12 due to fears of a smaller soybean crop and a demand recovery. But supply prospects could improve in 2H as the likely favourable selling prices in 2Q should encourage US farmers to raise their plantings.. This and better weather prospects following the end of La Nina may dampen price prospects later in the year.
Favour Indon planters
We raise Indonesian planters to Overweight due to their improved valuations and rising prospects for sharing export tax benefits with refiners. We maintain our Trading Buy call on Singapore planters for liquidity and valuation reasons. Malaysian planters remain an Underweight due to their rich valuations, rising labour costs and earnings risk from a potential change in the export policy. We upgrade our rating for four stocks in Indonesia and Hap Seng Plant in Malaysia. BW Plantations is our new top pick in Indonesia, Wilmar remains our pick for Singapore and Sime Darby is our favourite Malaysian planter. (Read full report)
We raise Indonesian planters to Overweight due to their improved valuations and rising prospects for sharing export tax benefits with refiners. We maintain our Trading Buy call on Singapore planters for liquidity and valuation reasons. Malaysian planters remain an Underweight due to their rich valuations, rising labour costs and earnings risk from a potential change in the export policy. We upgrade our rating for four stocks in Indonesia and Hap Seng Plant in Malaysia. BW Plantations is our new top pick in Indonesia, Wilmar remains our pick for Singapore and Sime Darby is our favourite Malaysian planter. (Read full report)
Source : CIMB Investment Research
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