Singapore Stock Market News

Plantations - Refuelling biodiesel demand

StockFanatic
Publish date: Thu, 09 Jan 2014, 01:45 PM
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We anticipate a better year for palm oil producers in 2014 as they are likely to enjoy higher selling prices for their palm products, lower fertiliser costs and a slower rise in labour costs. Also we expect M&A activities in this sector to remain healthy.

However, the sector's valuation is not cheap - it is trading in line with its historical average P/E - and we continue to expect challenges in reining in costs and growing the business. We maintain our Neutral stance on the sector. Our picks are First Resources (upstream exposure), Wilmar (biodiesel exposure), Ta Ann (mid-cap palm oil player), Astra Agro and London Sumatra (exposure to weak rupiah).
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