PLANTATION
[%JqGE%] [%Dfbm%] $KLSE-SDG 
Research by Kenanga
Neutral

“Mixed Fortunes Among Upstream, Downstream”

We expect CPO prices to stay firm, averaging at RM3,800 per MT in CY24 as supply increment trails demand growth. We expect better upstream profits on firm CPO prices and easier cost but weak downstream profits to persist on competition arising from excess refining capacity in the region and subdued demand for oleochemicals on a soft global economy (with the exception of the edible specialty fats). The sector’s valuations are not excessive at 1.1x PBV and 16x PER. We maintain NEUTRAL for the sector with preference for smaller, high-growth and upstream-centric planters.

Analyst(s):
Teh Kian Yeong 
[%RRRK%]

PLANTATION
$KLSE-IOICORP $KLSE-KLK $KLSE-SDG 
Research by Kenanga
Neutral

“Mixed Fortunes Among Upstream, Downstream”

We expect CPO prices to stay firm, averaging at RM3,800 per MT in CY24 as supply increment trails demand growth. We expect better upstream profits on firm CPO prices and easier cost but weak downstream profits to persist on competition arising from excess refining capacity in the region and subdued demand for oleochemicals on a soft global economy (with the exception of the edible specialty fats). The sector’s valuations are not excessive at 1.1x PBV and 16x PER. We maintain NEUTRAL for the sector with preference for smaller, high-growth and upstream-centric planters.

Analyst(s):
Teh Kian Yeong 
tehky@kenanga.com.my