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Mahamad Rodzi Abdul Ghani




Mahamad Rodzi Abdul Ghani





CPO price in focus after hitting RM1,500
Saturday, June 8, 2002 (The Star) - AFTER hitting a three-year high ofRM1,510 per tonne on Thursday before easing back to RM1,500 yesterday,crude palm oil (CPO) prices will be closely watched next week as a furthersurge will likely prompt renewed buying interest in pure plantation stockswhich hold the potential to trigger a new rally on the KLSE.Market players said genuine buying interest in plantation stocks wouldsoon emerge as industry players were gradually becoming more confident ofa continued strengthening of the CPO price; backed by strong fundamentals,depleting stocks and production, as well as an encouraging export outlook.Late last month, despite the price of CPO breaching the RM1,300 per tonnelevel after plunging to RM673 in June last year, market players were stillreluctant to pick up attractive plantation stocks on the KLSE because theywere unconvinced that the CPO price was trending upwards.

“The performance of the stock market depends on whether the price of CPOwill strengthen further over the next two to three weeks,’’ one marketplayer said when contacted by Star Business. “No one knows what willhappen next … the CPO price can even surge to RM1,800-RM1,900 per tonnebefore the end of this year if the encouraging factors persist.”Meanwhile, a research head with a local stockbroking house has reaffirmedhis pick of plantation stocks, namely IOI Corp Bhd, Kuala Lumpur KepongBhd, Golden Hope Plantations Bhd, PPB Palm Oils Bhd, Kulim (M) Bhd, JohorTenggara Oil Palm Bhd, MHC Plantations Bhd and Asiatic Development Bhd.He said: “Big companies like IOI Corp, KL Kepong and Golden Hope whichhave price earnings (PE) of 15 to 16 times can still be considered ascheap, as the PEs were based on when CPO was trading at between RM1,100and RM1,200 per tonne.”“Just imagine (their PEs now) with the price of CPO hovering betweenRM1,400 and RM1,500 per tonne!”A plantation analyst said the wait-and-see attitude among market playerstowards plantation stocks could be attributed to the “underlying issues”currently faced by companies such as Kumpulan Guthrie Bhd and IOI Corp.He added, however, that the continued uptrend in CPO prices couldgradually improve the prices of plantation stocks up to September thisyear.PPB Palm Oils executive director and chief operating officer Khoo KheeMing said: “Encouraging external factors currently provide the impetus forthe price of CPO to rise further.”As a plantation operator, “we welcome the long-awaited price hike, whichwould translate into stronger results for the group this year,” he said.In fact, he said, the group’s first-quarter result had also shown a strongupturn in profit and the group was poised to perform better.MHC Plantations executive director Datuk Mah King Thian said: “To date westill have not entered into any forward contract (to sell) because thegroup plans to capitalise on better gains when the CPO price surgesfurther.”He also expects significant improvement in group profit this year in linewith the uptrend in the price of CPO.(The informations and opinions expressed in this article represent theviews of the author only. They should not be seen as necessarilyreflecting the views of Palm News)