RHB Research has maintained a “Neutral” call on the plantations sector with its top picks among others Wilmar international, Kuala Lumpur Kepong (KLK), Sarawak Oil Palms (SOP), Ta Ann (TAH), and PP London Sumatra (LSIP).
It said that although it notes that its CPO price assumptions of MYR4,300/tonne for 2022 and MYR3,600/tonne for 2023 will likely need to be revised given factors affecting prices like the Russia-Ukraine war and changes in regulations – it prefers to revise this at a later stage, ie once prices are less volatile.
Reviewing the downside risks on the price, RHB said that most speakers at the 33rd Palm & Lauric Oils Price Outlook Conference & Exhibition (POC 2022) said that it would depend on the extent of the damage to Black Sea sun seed and soybean crops.
It said that additionally, the impact of demand rationing also needs to be monitored, as inflationary pressures are causing severe woes in India, Pakistan, and China.
On the upside risks to prices, RHB said that it includes a prolonged war, no resolution to Malaysia’s labour shortage issue, further extreme climate conditions, and no changes to biofuel mandates globally.
