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Published: Thursday December 6, 2012 MYT 11:28:00 AM

Plantations slip on concerns of weaker fourth quarter

KUALA LUMPUR: Shares of plantation companies topped the losers' list on Thursday despite the slight increase in crude palm oil (CPO) futures as worries about weaker earnings in the fourth quarter weighed on investors' sentiment.

At 11.02am, Far East fell the most, down 50 sen to RM6.80 while Batu Kawan slipped 12 sen to RM17.68, United Plantations dropped 10 sen to RM24.40, Sarawak Oil Palms lost seven sen to RM5.90.

However, crude palm oil (CPO) futures for February delivery rose RM23 to RM2,307.

The FBM KLCI rose 2.72 points to 1,616.51. Turnover was 215.20 million shares valued at RM244.55mil. There were 175 gainers, 226 losers and 271 counters unchanged.

Maybank KE Research said the plantations sector posted substandard results for the third consecutive quarter.

"While earlier quarters disappointed on steep fresh fruit bunches (FFB) production declines due to tree stress, 3Q12 results were primarily impacted by a plunge in CPO average selling price and higher costs, which offset a rebound in production," it said.

The research house said expectations are rife that 4Q12 will be another washout on still-weak CPO ASPs. While Neutral on a 12 month, it had advocated a "take profit" strategy at the start of 4Q.

"We estimate that Malaysia's CPO stockpile peaked in November 2012 at 2.6 million tonnes (+4% MoM), and expect a steady recovery in CPO prices in 1Q13 as stocks recede. Sarawak Oil Palms and Sime are our top BUYs in Malaysia," it said.


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