Asian plantation stocks, including those in Singapore, lack catalysts to head higher over next 12 months as industry fundamentals not supportive, says Macquarie, according to Dow Jones.

Macquarie says CPO prices may face pressure given record soybean inventories (palm oil is substitute for soybean oil), narrow price discount between CPO and soy oil, increased CPO inventories due to seasonal recovery in production.

Based on outlook, says investors need not pay higher-than-average valuations for plantation stocks: “Accumulate stocks closer to their historical average valuations (about 15% below current levels). We also recommend that investors look to accumulate names that have higher production growth potential due to a higher proportion of immature hectarage.”

Cites KL Kepong (2445.KU), London Sumatra (LSIP.JK) as preferred picks in region, with Neutral call on both with respective target of MYR18.00 ($7.7), IDR9,000 ($1.37). Rates First Resources (EB5.SG) at Underperform with $0.97 target, Indofood Agri (5JS.SG) at Neutral with $2.11 target.