Public Invest maintains neutral call on plantations
KUALA LUMPUR: Public Invest Research has maintained its neutral rating on the plantation sector with an unchanged crude palm oil (CPO) price forecast of between RM2,750 and RM2,850 a tonne for 2013 and 2014, respectively.
CPO prices are currently hovering between RM2,200 and RM2,300 a tonne, its lowest in five months compared to a historical high of over RM4,300 a tonne in 2008.
In its research note, Public Invest said it also remains neutral on all plantation companies under its coverage.
"Fundamental factors remain weak, leading us to retain our neutral call on the sector.
"Though current CPO prices are far reaching from our forecasts, we think that the downside risk for most plantation companies has been reflected in the share performance.
"For integrated plantation companies, earnings are less risky as their downstream segments are set to make some handsome gains, given the lower entry cost that will help offset losses in the upstream business," it said.
Based on forecasts provided by six speakers at the three-day Palm and Lauric Oils Conference 2013 held by Bursa Malaysia here last week, CPO prices are expected to hover between RM1,950 and RM3,200 a tonne.
The consensus forecast among participants averaged at RM2,550 a tonne, significantly lower than RM3,100 a tonne forecast at the conference last year.