Crude palm oil (CPO) prices are likely to sustain above RM3,100 per tonne in the near term until La Nina subsides, said
Hong Leong Investment Bank (HLIB).
In a research note today, HLIB said, with the current La Nina event expected to last for the next few months, coupled with the recently-expanded price gap between CPO and soyabean oil, the CPO price will likely sustain at high prices over the next few months.
HLIB said despite its bullish view on the near-term CPO prices, it would keep its average CPO price assumption of RM3,000 per tonne for this year as the price would likely to weaken once La Nina subsided.
"Also, the current global economic headwinds will likely remain a long-drawn issue in our view, and this may curb demand for palm oil, and hence palm oil prices," it said.
It said it would also raise its target price earnings (PEs) for plantation companies under its coverage by 1-2 times to 11-15 times from 9-14 times previously.
"Despite the upgrade in target PE, we are keeping our 'neutral' stance on the sector given the unattractive valuation (in particularly, the bigger plantation players) relative to their regional peers and our less optimistic view on the downstream segment's fortunes," it said.
HLIB said its top picks were Tradewinds Plantantation Bhd (buy with target price of RM5.04) and TSH Resources Bhd (buy with target price of RM2.13). -- Bernama
Hong Leong Investment Bank (HLIB).
In a research note today, HLIB said, with the current La Nina event expected to last for the next few months, coupled with the recently-expanded price gap between CPO and soyabean oil, the CPO price will likely sustain at high prices over the next few months.
HLIB said despite its bullish view on the near-term CPO prices, it would keep its average CPO price assumption of RM3,000 per tonne for this year as the price would likely to weaken once La Nina subsided.
"Also, the current global economic headwinds will likely remain a long-drawn issue in our view, and this may curb demand for palm oil, and hence palm oil prices," it said.
It said it would also raise its target price earnings (PEs) for plantation companies under its coverage by 1-2 times to 11-15 times from 9-14 times previously.
"Despite the upgrade in target PE, we are keeping our 'neutral' stance on the sector given the unattractive valuation (in particularly, the bigger plantation players) relative to their regional peers and our less optimistic view on the downstream segment's fortunes," it said.
HLIB said its top picks were Tradewinds Plantantation Bhd (buy with target price of RM5.04) and TSH Resources Bhd (buy with target price of RM2.13). -- Bernama
