Malaysia’s inventory level dipped to 1.53m tonnes in Jun 17, lower than market expectations. The drop was mainly due to weaker mom production. Plantation companies could report better qoq and yoy performances, especially Sabah-based plantation companies which have the largest qoq production increases in the sector are likely to outperform peers. Maintain UNDERWEIGHT as we expect significant CPO ASP weakness going into 2018.

Source: UOB Kay Hian Research - 11 Jul 2017