Disconnect between CPO and share price of planters

PublicInvest Research expects Malaysian plantation companies to post stronger earnings, owing to higher average prices of CPO. “In the fourth quarter of financial year 2020 (Q4), all plantation players except IOI Corp Bhd, Kuala Lumpur Kepong Bhd and Ta Ann Holdings Bhd will report stronger production on a yearly basis. Nevertheless, we believe the impact of weaker production would be offset by the stronger CPO prices".

KUALA LUMPUR: There has been a disparity between crude palm oil (CPO) prices and local plantation counters, which is possibly affected by the environmental, social and governance (ESG) criteria resulting in lower interest and valuation for the plantation sector.

According to brokerage firms, planters’ share prices remained muted despite a rally in CPO prices.