Monday, 12 March 2012

Sime Darby run-up takes a breather, KLCI down

KUALA LUMPUR (March 12): Shares of SIME DARBY BHD [] fell to a low of RM9.64 on Monday as its recent rally hit a bump, asa blue chips retreated in line with the cautious key regional markets.

At 3.35pm, Sime Darby fell 20 sen to RM9.65, which weighed on the FBM KLCI also. The shares were very actively traded with 17.09 million units done.

The FBM KLCI fell 12.66 points to 1,566.34. Turnover was 895.78 million shares valued at RM1.08 billion. There were 216 gainers, 503 losers and 310 stocks unchanged.

Analysts were bullish on crude palm oil (CPO) prices with one foreign research house describing Sime Darby as its top pick among PLANTATION [] companies in Malaysia and target price of RM11.28.

Hwang DBS Vickers Research has a buy on SIme Darby with a target price of RM11.25

The research house said at the recent crude palm oil conference that most of the speakers projected crude palm oil prices would be sustainable at RM3,000 to RM3,500 a tonne in the year.

Dorab Mistry was most bullish, expecting CPO prices to test the RM4,000 level by June12 due to tight supply.

“There was a general consensus that the current high price level is justified by rising demand for vegetable oils, with palm oil leading the pack given its superior yields vis-à-vis other crops, despite challenges such as limited arable land, water and falling productivity,” it said.

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