Plantation blue chips mixed after MPOB says GNI target a ‘tall order’

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KUALA LUMPUR (Jan 20): Plantation blue chip stocks were mixed in morning trades after the Malaysian Palm Oil Board (MPOB) said the palm oil sector's target contribution to gross national income (GNI) of RM178 billion by 2020 looked like a “tall order”.

According to the MPOB, the industry still has “a long way to go” before it can achieve the “very high” GNI contribution target under the government’s Economic Transformation Programme.

As at 11.39 am today, Felda Global Ventures Holdings Bhd (FGV) slid 2 sen or 0.9% to RM2.14 on trades of 509,900 shares. It had earlier fallen to a low of RM2.13.

Sime Darby Bhd fell 4 sen or 0.4% to RM9.26 on trades of 721,200 shares. IOI Corp Bhd also declined 3 sen or 0.6% to RM4.67 on trades of some 1.1 million shares. It had earlier fallen to a low of RM4.64.

However, Kuala Lumpur Kepong Bhd (KLK) rose 8 sen or 0.4% to RM22.08 on trades of 105,100 shares. PPB Group Bhd also gained 4 sen or 0.3% to RM14.04 on trades of 94,800 shares.

Genting Plantations Bhd (GenP) climbed 22 sen or 2% to RM10.32 with 1,100 shares changed hands.

In a note today, Kenanga Research maintained a "neutral" call on the sector on limited near-term catalysts.

The research house pointed out a possible weak El Nino and lacklustre biodiesel demand would limit immediate crude palm oil (CPO) price upside.

Kenanga’s research analysts Voon Yee Ping and Sarah Lim expect CPO prices in the second half this year to weaken on production recovery.

Kenanga retained Sime Darby (fundamental: 1.3; valuation: 1.6) with an ‘outperform’ with target price (TP) of RM9.92.

It maintained a ‘market perform’ call for KLK (fundamental: 1.3; valuation: 0.7), PPB (fundamental: 2.7; valuation: 0.6) and FGV (fundamental: 2.1; valuation: 2.4) with TP of RM21.50, RM15.26 and RM2.30 respectively.

Kenanga kept an ‘underperform’ call on IOI Corp (fundamental: 1.7; valuation: 2.1) and GenP (fundamental: 2.7; valuation: 1.5) with TP of RM4.40 and RM9.20 respectively.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)