KUALA LUMPUR (August 11): Hong Leong Investment Bank (HLIB) Research has maintained its “Overweight” rating on the plantation sector and retained its 2022-24 CPO price assumptions of RM5,500/4,500/3,800 per tonne.
In a note on Thursday (Aug 11), the research house said palm oil stockpile increased by 7.7% m-o-m to 1.77 million tonnes in July 2022, boosted by higher output and lower domestic consumption, but partly moderated by higher exports.
“Stockpile will likely increase further in coming month, on the back of seasonally higher output trend, Indonesian government’s move to accelerate palm oil exports, and the absence of seasonal-driven demand catalyst.
“Maintain 2022-24 CPO price assumptions of RM5,500/4,500/3,800 per tonne, and Overweight stance on the sector.
“For exposure, we prefer integrated players such as Kuala Lumpur Kepong Bhd (Buy; TP: RM26.54) and IOI Corp Bhd (Buy; TP: RM4.36) over purer upstream players,” it said.