KUALA LUMPUR (Nov 12): Plantation counters are experiencing bullish share prices on Bursa Malaysia following positive news on exports and reduction in palm oil stocks by 4.1 per cent to 2.35 million tonnes in October, which pushed up crude palm oil (CPO) prices.

At 10.45 am, Sime Darby Plantation rose three sen to RM5.10, KLK jumped 16 sen to RM22.36 while IOI Corporation was one sen better at RM4.41.

Exports of palm oil and palm oil products rose 16.4 per cent month-on-month to 1.64 million metric tonnes, bolstered by stronger demand from China (+23.8 per cent) and the EU (+43.8 per cent), which outpaced weaker demand from India (-29.2 per cent), Pakistan (-31.6 per cent) and the US (-9.4 per cent).

“We believe there should be stronger demand towards the year-end as buyers tend to lock in orders ahead of the possibility of higher palm oil export duty in both the Indonesian and Malaysian markets as CPO prices have surpassed the minimum threshold level of RM2,250 per tonne,” Public Investment Bank said in a note today.

It said CPO prices may surpass RM2,800 per tonne in the coming months due to the tightening of CPO supplies in global markets.

“This should be a boon to all plantation companies after suffering from the poor CPO price performance over the last two years,” the investment bank said, adding that it is maintaining an “overweight” outlook on the sector.

Public Investment Bank foresees exciting fourth quarter 2019 results for plantation companies.

“We think the upcoming third quarter corporate results for Malaysian plantation companies may still be lukewarm as CPO prices only gained momentum in late August. During the quarter, Sarawak Plantation registered the strongest fresh fruit bunches production growth, up 20.9 per cent followed by FGV, 14.8 per cent and IOI Corp, 12.4 per cent.

“We think 4Q19 results could be one of the strongest quarterly results seen since 2017. Small-mid cap plantation stocks remain our favourite especially Sarawak Plantation and Ta Ann as valuations remain attractive at current levels,” it said.