Sector stocks stage a comeback; brighter days ahead as palm oil prices pick up

SINGAPORE (Dec 20): The palm oil industry this past year endured its fair share of turbulent times on the back of weak commodity prices, bad weather and dry spells in key markets such as Indonesia. The industry also faced headwinds from unfavourable new regulations such as the European Union’s biodiesel levies on Indonesia’s produce.


Indonesia finds one-fifth of palm oil plantations are illegal

(Oct 11): Indonesia is trying to clamp down on illegal palm oil plantations by first identifying the perpetrators.

A government investigation found that 3.1 million hectares, or about 19% of the country’s total oil palm plantations, are operating without permits in forest areas. Authorities are in the process of identifying the owners of the unlicensed plantations and are seeking legal advice on how to deal with them, according to an official at Indonesia’s ministry of economic affairs.

Brokers slash estimates for Bumitama after 1Q disappointment, but say production remains strong

SINGAPORE (May 17): DBS Vickers Securities and UOB Kay Hian are maintaining their “buy” recommendations on Bumitama Agri Limited (BAL) with the respective price targets of 69 cents and 81 cents, even as the palm oil producer missed both research houses’ expectations with its latest set of quarterly results.

RHB Research, on the other hand, remains “neutral” on the stock while lowering its P/E based target price to 62 cents from 67 cents previously to reflect a 9% downside.  

Olam announces third palm plantation to achieve RSPO certification

SINGAPORE (May 2): Olam International says its Mouila Lot 3 palm plantation in Gabon has become Roundtable on Sustainable Palm Oil (RSPO) certified.

The 38,363 hectare (ha) palm plantation is managed by Olam Palm Gabon, a joint venture between Olam and the Republic of Gabon, and has a total planted area of 18.272 ha, out of which 18,765 ha of high conservation value (HCV) is being conserved.

The remaining area comprises infrastructure comprises facilities, roads and housing.

Bumitama Agri unanimously rated 'buy' for potential undervaluation, bright outlook

SINGAPORE (Nov 13): Maybank Kim Eng, DBS Vickers Securities, RHB Research and UOB Kay Hian are maintaining their “buy” calls on Bumitama Agri with the respective price targets of 98 cents, 85 cents, 81 cents and 80 cents.

All four brokerages continue to like the stock for its positive near- to medium-term earnings outlook with the view that it is undervalued.

Golden Agri posts 56% decline in 1H earnings to US$59 mil

SINGAPORE (Aug 14): Golden Agri-Resources (GAR) has announced earnings of US$59.4 million ($80.9 million) for the 1H17 ended June, down 55.5% from US$133.6 million reported in 1H16 due to the recognition of deferred income tax assets.

Revenue for the half year grew 17.5% to US$3.8 billion compared to US$3.2 billion a year ago, primarily due to higher average crude palm oil (CPO) prices as well as the recovery in palm production.

FGV power tussle escalates

KUALA LUMPUR (June 14): The tussle between the management and board of directors of Felda Global Ventures Holdings (FGV) over irregular business dealings escalated yesterday as the board moved to serve show-cause letters on its group president and chief executive officer (CEO) Datuk Zakaria Arshad and group chief financial officer (CFO) Ahmad Tifli Mohd Talha.

The board issued the show-cause notice to the duo over the long outstanding debt that Dubai-based Safitex Trading LLC owed to Delima Oil Products Sdn Bhd, a subsidiary of FGV.

Here’s how you can invest in regional plantation stocks

SINGAPORE (Jan 12): December statistics for palm oil were less than satisfactory, according to DBS Group Equity Research.

In terms of crude palm oil output, December’s output was 1.474 million metric tonnes, a 6% decrease from November’s figures from lower fresh fruit bunches yield. The numbers were also 6% below the brokerage’s estimates.

Will 2017 be a bumper crop year for plantation stocks?

SINGAPORE (Jan 4): RHB is maintaining its “neutral” stance on the plantation sector with its top pick as Golden Agri for its diversified land bank, crude palm oil (CPO) price sensitivity and stock liquidity.

The stock has been given a target price of 46 cents.

In the research house’s Singapore Strategy report on Tuesday, RHB believes CPO prices could remain at high levels up to 1Q17 on the back of the strong US dollar as well as a still-weak CPO output due to the 24-month lagged impact of El Nino.

Neutral from La Nina

SINGAPORE (July 13): Maybank Kim Eng is maintaining its “neutral” call on the plantations sector, given weak demand for crude palm oil (CPO) from major importing companies have placed a dampener on prices.

To recap, CPO prices had rallied from a low of RM1,806 per tonne ($611 per tonne) last Aug to hit a high of RM2,716 per tonne in April. This came on the back of a fall in yields for fresh fruit bunches which resulted from the El Nino drought.

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