Last call to ‘buy’ these plantation stocks on the CPO price rally

SINGAPORE (Jan 31): UOB Kay Hian is maintaining its “overweight” call on the planation sector within Singapore and the region, noting that crude palm oil (CPO) prices are likely to stay firm throughout 1H17 as supply is still relatively tight.

“We see weaker CPO prices in 2H17 vs 1H17, but maintain our price expectation of RM2,600 ($834) for 2017. Investors should sell on strength when share prices trend higher as companies are expected to report good 4Q16 and 1Q17 earnings,” says UOB’s regional research team in a recent report.

It is also expecting CPO demand to improve marginally this year, driven by stable demand on Indonesia’s biodiesel mandate; the rolling out of the B10 biodiesel programme in Malaysia; as well as stable demand from India and China.

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