Stock Name: KULIM
Company Name: KULIM (M) BHD
Research House: OSK

KUALA LUMPUR: OSK Research is maintaining its Buy call on Kulim Bhd with a a target price of RM10.30.

It said on Wednesday, Sept 1 that Kulim's 1HFY10 core earnings at RM96.8 million were below its full-year forecast at RM269.6m as its oleochemical segment swung from an EBIT of RM17.9 million in 1Q to a loss of RM18.6 million in 2Q ended June 30, 2010.

'While the 2Q results were weighed down by a turn for the worse at the oleochemical division, Kulim is in the process of completing its sale, which should no longer be a drag from 4Q onwards,' it said in a research note.

OSK Research the stock is trading at a very cheap valuation of 11.1 times FY10 and 9.6 times FY11 earnings compared to its peers' at 17 times to 20 times forward earnings. It said this is especially so considering the quality of Kulim's assets and its industry-leading sustainable palm oil practices.