Tuesday, December 24, 2013

Plantation Sector - 2014 a Year Of Plenty (DMG)

Plantation Sector - 2014 a Year Of Plenty

We are OVERWEIGHT on the plantation sector, which we believe will have a good year ahead with most companies seeing stronger profitability. This will be driven by stronger demand for palm oil from the food and fuel sectors, higher ASPs due to lacklustre production growth in Indonesia as well as lower fertiliser costs. Our average CPO price assumptions are raised to MYR2,700/MYR2,900 for CY14/15.

¨ Biodiesel push. Malaysia is raising its mandatory biodiesel blend to 7% from 5% currently as early as Dec 2013, while Indonesia is pushing for a 3m tonnes of biodiesel (B100) consumption next year. We believe the moves by the governments of the world’s two biggest biodiesel producing countries will have a significant impact on palm oil demand. Note that never before has palm biodiesel received such a strong mandate.


¨ Cheaper fertiliser a boon. In view of the weaker fertiliser demand and the breakup of the potash cartel, fertiliser prices are expected to be cheaper in 2014. In USD terms, composite fertiliser cost is 23% cheaper compared to Oct 2012 when plantation companies locked in their 1HCY12 requirements. With lower fertiliser prices seen in 2014, plantation companies could enjoy lower unit cost of production, which should boost their margins. In the worst-case scenario, production cost will remain flat in the year ahead, as opposed to its multi-year hikes since 2006.

¨ Food demand continues to grow. With the global economy now on a stronger footing, there should be no faltering in demand from the food sector. 2014 could see palm oil regaining lost market share in China as a result of the government’s austerity drive, which has hurt the  restaurant business, a heavy user of palm oil.

¨ Stock/usage ratio to fall to multi-year low. Assuming Indonesia uses 2m tonnes of CPO for biodiesel production (vs targeted 3m tonnes), and its export/production grow by 5% and 2m tonnes respectively, the stock/usage ratio will fall to 8% from 13% at end-2013, its lowest since 2009. Such a low stock/usage ratio will likely result in CPO prices maintaining a very narrow discount against soybean oil prices.

¨ OVERWEIGHT. While maintaining Overweight on SGX plantation stocks, we upgrade the regional plantation sector to OVERWEIGHT (from Neutral) as the earnings outlook brightens after two years of contraction. We raise our CPO price assumptions for CY14 and CY15 to MYR2,700/tonne and MYR2,900/tonne respectively from MYR2,600.




Source/Extract/Excerpts/来源/转贴/摘录: DMG-Research,
Publish date: 23/12/13

No comments:

Post a Comment

Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
投资只需学好两门课: 一,是如何给企业估值,二,是如何看待股市波动
吉姆·罗杰斯(Jim Rogers)
“错过时机”胜于“搞错对象”:不会全军覆没!”
做自己熟悉的事,等到发现大好机会才投钱下去

乔治·索罗斯(George Soros)

“犯错误并没有什么好羞耻的,只有知错不改才是耻辱。”

如果操作过量,即使对市场判断正确,仍会一败涂地。

李驰(中国巴菲特)
高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

Tan Teng Boo


There’s no such thing as defensive stocks.Every stock can be defensive depending on what price you pay for it and what value you get,
冷眼(冯时能)投资概念
“买股票就是买公司的股份,买股份就是与陌生人合股做生意”。
合股做生意,则公司股份的业绩高于一切,而股票的价值决定于盈利。
价值是本,价格是末,故公司比股市重要百倍。
曹仁超-香港股神/港股明灯
1.有智慧,不如趁势
2.止损不止盈
成功者所以成功,是因为不怕失败!失败者所以失败,是失败后不再尝试!
曾淵滄-散户明灯
每逢灾难就是机会,而是在灾难发生时贱价买股票,然后放在一边,耐性地等灾难结束
  • Selected Indexes 52 week range

  • Margin of Safety

    Investment Clock

    World's First Interactive Investment Clock