KUALA LUMPUR: Shares of KUALA LUMPUR KEPONG BHD [] fell to its lowest in a week on Monday, Oct 3, hitting RM20.04 in late afternoon trade, as investors were rattled by the fall in the equities markets and crude palm oil futures.
At 3.21pm, KLK was down RM1.06 to RM20.04, the lowest since Sept 26 when it fell below RM20.
The FBM KLCI was down 30.98 points to 1,356.15. Turnover was 417.55 million shares valued at RM 693.07 million. Declining stocks hammered advancers 561 to 105 while 158 stocks were unchanged.
Maybank Investment Bank Research said it sees rising risk of a repeat of 2008 with global economy growth likely to slow considerably in 2012 amid a protracted debt crisis in the US and Europe, which will hurt global demand.
'Hence, we lower our CPO average selling price (ASP) forecast for 2012-13 to RM2,600 a tonne (from RM3,000 a tonne; -13%). At the same time, PLANTATION [] companies will suffer from margin squeeze with the recent sharp fall in palm kernel prices, and rising labour and fertiliser costs. We tactically downgrade Plantation earnings and stock calls for the near-term risks,' it said.
Maybank IB Research said Malaysian plantation companies will face rising cost pressures next year, mainly from rising fertiliser (+30% on-year) and labour costs (+30% on-year). Most plantation companies reports all-in cost of production of between RM1,000 a tonne and RM1,400 a tonne presently.
'Alongside the earnings downgrades, we cut KLK and GEN Plantations to Sell (from Hold), and Sime, TH Plant, and CBIP to Hold (from Buy). IOI remains a Buy as the stock is trading close to trough valuation following the recent selldown. Sarawak Oil Palms and TSH continue to be Buys as they promise 16%-20% FFB production CAGR over the next 3 years to cushion earnings from an anticipated correction in CPO prices and rising costs,' it said.
At 3.21pm, KLK was down RM1.06 to RM20.04, the lowest since Sept 26 when it fell below RM20.
The FBM KLCI was down 30.98 points to 1,356.15. Turnover was 417.55 million shares valued at RM 693.07 million. Declining stocks hammered advancers 561 to 105 while 158 stocks were unchanged.
Maybank Investment Bank Research said it sees rising risk of a repeat of 2008 with global economy growth likely to slow considerably in 2012 amid a protracted debt crisis in the US and Europe, which will hurt global demand.
'Hence, we lower our CPO average selling price (ASP) forecast for 2012-13 to RM2,600 a tonne (from RM3,000 a tonne; -13%). At the same time, PLANTATION [] companies will suffer from margin squeeze with the recent sharp fall in palm kernel prices, and rising labour and fertiliser costs. We tactically downgrade Plantation earnings and stock calls for the near-term risks,' it said.
Maybank IB Research said Malaysian plantation companies will face rising cost pressures next year, mainly from rising fertiliser (+30% on-year) and labour costs (+30% on-year). Most plantation companies reports all-in cost of production of between RM1,000 a tonne and RM1,400 a tonne presently.
'Alongside the earnings downgrades, we cut KLK and GEN Plantations to Sell (from Hold), and Sime, TH Plant, and CBIP to Hold (from Buy). IOI remains a Buy as the stock is trading close to trough valuation following the recent selldown. Sarawak Oil Palms and TSH continue to be Buys as they promise 16%-20% FFB production CAGR over the next 3 years to cushion earnings from an anticipated correction in CPO prices and rising costs,' it said.
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