PLANTATION
 [%EIPO%] [%JYEt%] 
Research by Kenanga
Neutral

“Higher-Than-Expected April’s Inventory”

We maintain CPO price of RM3,800/MT for CY24-25 along with our NEUTRAL call. The sector’s 1.2x PBV is defensive but there is no compelling upside catalyst. The smaller, more upstream-centric players should see decent 1Q earnings but weak downstream margins are expected to dampen profitability of larger integrated players such as SIMEPLT, IOI and KLK. We prefer PPB (OP; TP: RM18.50) for its regional agro/consumer exposure, and upstream-centric players with growth potential such as TSH (OP; TP RM1.30) which is expanding its planted area by 20%-25%, and UMCCA (OP; TP: RM6.00) as its Indonesian operation and profitability matures.

Analyst(s):
Clement Chua 
[%nuRC%]

PLANTATION
 $KLSE-TSH $KLSE-UMCCA 
Research by Kenanga
Neutral

“Higher-Than-Expected April’s Inventory”

We maintain CPO price of RM3,800/MT for CY24-25 along with our NEUTRAL call. The sector’s 1.2x PBV is defensive but there is no compelling upside catalyst. The smaller, more upstream-centric players should see decent 1Q earnings but weak downstream margins are expected to dampen profitability of larger integrated players such as SIMEPLT, IOI and KLK. We prefer PPB (OP; TP: RM18.50) for its regional agro/consumer exposure, and upstream-centric players with growth potential such as TSH (OP; TP RM1.30) which is expanding its planted area by 20%-25%, and UMCCA (OP; TP: RM6.00) as its Indonesian operation and profitability matures.

Analyst(s):
Clement Chua 
clement.chua@kenanga.com.my