KUALA LUMPUR: Hong Leong Investment Bank (HLIB) research remains bullish on crude palm oil (CPO) prices due to lower production in December.
It said on Tuesday, Jan 11 that it expects the seasonally weak 1Q production figures will sustain current high CPO prices.
'We also expect demand to start rising in 1Q as we move from a seasonally weak 4Q to seasonally strong 1Q (due to festive season),' it said.
According to the Malaysia Palm Oil monthly data for December released on Monday, CPO production in December fell by 15.3% on-month to 1.23 million tonnes (lowest December production since 2002).
HLIB Research said this was hardly a surprise given the adverse weather condition (drought in January-March 2010 and La Ni''a in later part of the year),' it said.
Exports declined by 14.3% on-month to 1.29 million tonnes in December 2010, due mainly to lower demand from most of the CPO importing countries.
End inventories in December declined by 1.3% on-month to 1.61 million tonnes, on the back of the production that fell sharper than exports.
'Our top picks (in order of preference) are: IOI Corporation (BUY, TP: RM6.62), Sime Darby (BUY, TP: RM10.76), Tradewinds PLANTATION [] (BUY, TP: RM4.60), Genting Plantations (BUY, TP: RM10.19) and KLK (BUY, TP: RM25.03),' it said.
It said on Tuesday, Jan 11 that it expects the seasonally weak 1Q production figures will sustain current high CPO prices.
'We also expect demand to start rising in 1Q as we move from a seasonally weak 4Q to seasonally strong 1Q (due to festive season),' it said.
According to the Malaysia Palm Oil monthly data for December released on Monday, CPO production in December fell by 15.3% on-month to 1.23 million tonnes (lowest December production since 2002).
HLIB Research said this was hardly a surprise given the adverse weather condition (drought in January-March 2010 and La Ni''a in later part of the year),' it said.
Exports declined by 14.3% on-month to 1.29 million tonnes in December 2010, due mainly to lower demand from most of the CPO importing countries.
End inventories in December declined by 1.3% on-month to 1.61 million tonnes, on the back of the production that fell sharper than exports.
'Our top picks (in order of preference) are: IOI Corporation (BUY, TP: RM6.62), Sime Darby (BUY, TP: RM10.76), Tradewinds PLANTATION [] (BUY, TP: RM4.60), Genting Plantations (BUY, TP: RM10.19) and KLK (BUY, TP: RM25.03),' it said.
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