PO end-stocks hit above the 2.0mn tonnes psychological level. PO end-stocks in Malaysia hit above the 2.0mn tonnes psychological level, reaching 2.12mn tonnes in August, an increase of 22.5% MoM and 1.4% YoY (the highest since Feb 2023) lifted by higher production (+8.9% MoM and 1.6% YoY to 1.75mn tonnes) and slower export which contracted by 9.8% MoM and 6.0% YoY to 1.22mn tonnes. Overall, higher inventory was due to higher stocks for both CPO (crude PO) and PPO (processed palm oil) which climbed 35.5% and 9.0% MoM respectively to 1.20mn tonnes and 924,351 tonnes during the period.
We expect stocks level in the next couple of months to remain elevated in the region of +/-300k tonnes to 2.0mn tonnes (i.e., peak in October), in view of 1) an increase in PO production during its seasonal recovery period, and 2) sluggish demand post-festivities on completion and normalisation of replenishment activities, compounded by an increase in competition from Indonesia, and from other edible oils especially SBO, rapeseed oil and sunflower oil.
CPO price to stay in a range of circa RM400/MT above or below RM3,800/MT in the near term. On this note, we foresee that price (MPOB-local delivery) would trade within a range of circa RM400/MT above or below RM3,800/MT in the near term. We hold our view that CPO price in the near-to-medium term will remain supported, underpinned by 1) widening discount of price differential between PO and SBO prices, 2) increase in biofuel mandate, 3) weaker Ringgit, 4) an increase in demand for PO from India mainly driven by restocking activities ahead of festivities, and 5) slower growth in palm oil supply from Malaysia and Indonesia due to reduced yields resulting from inadequate fertilizer application over several years stemming from labour shortages, and reduced productivity among new workers, who still lack in skills for Malaysian estates while for Indonesia is due to unfavourable weather conditions.
Maintain a NEUTRAL recommendation on the sector with a BUY call on IOI (TP: RM4.50), and a HOLD call for KLK (TP: RM24.05), SIME Darby Plants (TP: RM4.60), GENP (TP: RM5.87), Sarawak Plant (TP: RM2.06), Boustead Plants (TP: RM1.55) and TSH (TP: RM1.01); whilst a SELL on SOP (TP: RM2.05), FGV (TP: RM1.23) and HAPL (TP: RM1.70), though a non-rated for TH Plant.
Source: BIMB Securities Research - 12 Sept 2023
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KLK2024-08-24
TSH2024-08-23
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KLK2024-08-23
SDG2024-08-23
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SDG2024-08-23
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SDG2024-08-23
SOP2024-08-23
THPLANT2024-08-23
TSH2024-08-23
TSH2024-08-23
TSH2024-08-23
TSH2024-08-22
KLK2024-08-22
SDG2024-08-22
SDG2024-08-22
SDG2024-08-22
SDG2024-08-22
SDG2024-08-22
SDG2024-08-22
SDG2024-08-22
SDG2024-08-22
SDG2024-08-21
SDG2024-08-20
FGV2024-08-20
KLK2024-08-20
KLK2024-08-20
KLK2024-08-20
KLK2024-08-20
KLK2024-08-19
FGV2024-08-19
FGV2024-08-19
KLK2024-08-16
KLK2024-08-15
GENP2024-08-15
KLK2024-08-15
SDG2024-08-15
SDG2024-08-15
SDG2024-08-15
SDG2024-08-15
SDG2024-08-15
SDG2024-08-14
FGV2024-08-14
FGV2024-08-14
FGV2024-08-14
FGV2024-08-14
KLK2024-08-14
KLK2024-08-14
KLK2024-08-14
TSH2024-08-13
FGV2024-08-13
IOICORP2024-08-13
KLK2024-08-13
SDG2024-08-13
SDG2024-08-13
SDG2024-08-13
SDGCreated by kltrader | Aug 12, 2024
Created by kltrader | Aug 12, 2024
Created by kltrader | Aug 09, 2024
Created by kltrader | Aug 09, 2024