KUALA LUMPUR: HLG Research says PLANTATION [] counters are likely to face cyclical headwinds in coming months, as CPO production starts to recover seasonally, while exports are likely to remain weak, given the relative high inventories of oilseeds and edible oils across the world.
The research house said on Friday, July 9 that IOI Corp's valuations are relatively richer against planters listed in Singapore and Indonesia (average 13-14 FY11 P/E).'' There is a downside risk to CPO price in the event of contagion of Europe's debt crisis.
'Despite technical indicators are showing some signs of improvement, IOI is still trapped in the downtrend line (DTL) started in March with a strong overhead resistance at RM5.20 and RM5.30 (200-d SMA). Hence, any rebound towards the stipulated resistance level is an opportunity to sell into strength,' it said.
On the downside, there are key support levels at RM4.88 (61.8% FR from 52-week low of RM4.37 and 52-week high of RM5.72), RM4.80 (middle DTL) and RM4.69 (76.4% FR).
'Our 3-month technical target is RM4.88, implying a 2.8x FY11 P/B (about'' 7% discount to its 10-year average at 3x),' it said.
The research house said on Friday, July 9 that IOI Corp's valuations are relatively richer against planters listed in Singapore and Indonesia (average 13-14 FY11 P/E).'' There is a downside risk to CPO price in the event of contagion of Europe's debt crisis.
'Despite technical indicators are showing some signs of improvement, IOI is still trapped in the downtrend line (DTL) started in March with a strong overhead resistance at RM5.20 and RM5.30 (200-d SMA). Hence, any rebound towards the stipulated resistance level is an opportunity to sell into strength,' it said.
On the downside, there are key support levels at RM4.88 (61.8% FR from 52-week low of RM4.37 and 52-week high of RM5.72), RM4.80 (middle DTL) and RM4.69 (76.4% FR).
'Our 3-month technical target is RM4.88, implying a 2.8x FY11 P/B (about'' 7% discount to its 10-year average at 3x),' it said.
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