M+ Online Research Articles

Author: MalaccaSecurities   |   Latest post: Fri, 4 Dec 2020, 8:47 AM


M+ Online Technical Focus - 27 July 2020

Author:   |    Publish date:

Plantation sector

On high-five

  • A month later, crude palm oil prices (CPO) has soared above the RM2,700 per tonne level; the highest in five months on amid the improving demand prospects. Already, the Malaysian Palm Oil Council (MPOC) has revised the price outlook to a high of RM2,994 per tonne, from RM2,594 per tonne announced last month.
  • The PENJANA stimulus package revolves 100.0% exemption on export duty on crude palm oil, crude palm kernel oil and processed palm kernel oil throughout 2H2020. Hence, we see positive tone to remain in place, recognising the government’s effort to boost the export of crude palm oil and related products.

Trading Catalyst

  • Rimbunan Sawit Bhd (RSAWIT) is a Sarawak based company with 17 estates of plantation land and 3 palm oil mills across Kuching, Sibu and Miri. To-date, RSAWIT’s landbank stood at 77,427-ha of which 48,765-ha are planted. As of FY19, 43,424-ha of planted trees will provide sustainable income over the foreseeable future. In bid to strengthen their operational cash flow and maintain a learner balance sheet, RSAWIT will be disposing 4,698.2-ha. of land to WTK Holdings Bhd for RM85.0m cash which is expected to be completed in 3QFY20.

Technical Outlook

  • RSAWIT has been on a steady rise forming the higher high and higher low formation since bottoming out in mid-March 2020. For now, we may anticipate a potential flag formation breakout above RM0.315, targeting the next resistance of RM0.345- RM0.365, with long term target at RM0.41. Support is pegged at around RM0.295, while cut loss is set at RM0.29.

Trading Catalyst

  • TDM Bhd (TDM) owns a total of 42,022-ha (31,295-ha in Terengganu and 10,727-ha in Kalimantan) planted oil palm land oil palms across 16 estates, 3 palm oil mills, 3 bio-composting plants and a biogas plant located in both Malaysia and Indonesia. In the meantime, TDM’s healthcare division comprises of 4 specialists hospitals with 407 beds that offer various healthcare services. Moving forward, we expect stronger performance in view of the rising CPO prices, whilst fresh fruit bunches (FFB) and CPO production rose 22.6% QoQ and 90.2% QoQ to 99,788.6 tonnes and 21,003.3 tonnes respectively in 2QFY20.

Technical Outlook

  • With the uptrend formation recently established, TDM has experienced a flag formation breakout above RM0.26. We reckon that the upbeat share price movement that was accompanied by rising volumes may spur price towards RM0.29-RM0.315, with long term target at RM0.34. Support is pegged at around RM0.25 level, while cut loss point is located at RM0.245.

Source: Mplus Research - 27 Jul 2020

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Related Stocks

Chart Stock Name Last Change Volume 
RSAWIT 0.295 0.00 (0.00%) 13,853,500 
WTK 0.455 -0.005 (1.09%) 1,324,400 
TDM 0.315 +0.005 (1.61%) 34,115,900 

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