RHBIB UPGRADES CALL ON PLANTATION SECTOR, SHARE PRICES YET TO REFLECT CPO PRICES

KUALA LUMPUR, Nov 12 (Bernama) -- RHB Investment Bank Bhd (RHBIB) has upgraded its recommendation on the plantation sector to “overweight” from “neutral,” given the higher crude palm oil (CPO) prices, which have crossed RM5,000 per tonne, amidst a blend of fundamental and speculative factors.

It said share prices have yet to catch up and are due for a re-rating, as they still reflect CPO prices of about RM4,500 per tonne.

“We believe with higher and more sticky prices in 2025, the sector will finally be re-rated upwards. 

“Overall, we expect prices to stay higher in the first half of 2025 (1H 2025), trading at RM4,400 per tonne to RM4,800 per tonne before moderating in 2H 2025 to RM4,000 per tonne to RM4,400 per tonne during the seasonal peak,” the bank said in its Regional Sector Update note today.

RHBIB raised its CPO price assumptions for 2024 to RM4,100 per tonne (from RM3,900 per tonne), for 2025 to RM4,300 per tonne (from RM3,800 per tonne) and for 2026 to RM4,100 per tonne (from RM3,800 per tonne). 

Going forward, it also said that United States president-elect Donald Trump’s 2.0 policies could still benefit palm oil, albeit to a lesser extent, as China has shifted its reliance away from US soybean oil in the last eight years.

RHBIB’s top picks include SD Guthrie, Johor Plantations Group, Sarawak Oil Palms, Bumitama Agri and London Sumatra Indonesia. 

Meanwhile, Hong Leong Investment Bank Bhd has maintained its “neutral” stance on the sector, pending a review of its earnings forecasts and target prices in the upcoming results season.

Year-to-date, its forecast for CPO is maintained at RM4,150 per tonne for 2024 and RM4,000 per tonne for 2025, with top picks including IOI Corporation and Hap Seng Plantations.

Public Investment Bank Bhd and Maybank Investment Bank Bhd have also maintained their “neutral” call for the sector.

-- BERNAMA