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Nomura is positive on sector due to recovery in palm oil price and production following end of El Nino impact, analysts June Ng and Abhishek Kumar write in report.
- Sees further share-price upside for Asean palm oil stocks
- Prefer upstream planters with strong growth profiles such as First Resources (top pick), Genting Plantations, Astra Agro and London Sumatra over bigger planters like IOI Corp. and Golden Agri
- Palm oil prices to continue to take lead from soybean prices “as long as there are no major changes in weather pattern”
- Stronger dollar helps boost earnings in domestic currency
- Increase palm oil price estimate for FY17-FY18 to 2,800-2,850 ringgit; crude palm oil futures for March 2017 delivery +1.65%
- Raise Astra Agro, Genting Plantations, Sime Darby to buy from neutral; Golden Agri to neutral from reduce
- Shares; AALI rises as much as 0.7%, IOI rises as much as 0.9%, GENP gains as much as 0.6%, LSIP climbs as much as 0.3%, FR advances as much as 0.8%, SIME rises as much as 0.2%
- NOTE: Jan. 11, Palm Oil Reserves in Malaysia Seen Falling in January: Analysts
- Credit Suisse Bullish on Palm Oil in Short Term on Tight Supply
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