Profile. Innoprise Plantation Berhad (INNO, Shariah-compliant), specializes in oil palm cultivation and development in Sabah. The Group manages 22,763 hectares of land, of which approximately 12,246 hectares are suitable for oil palm planting. Its plantation operations are located across six estates — Imbak, Gunung Rara, Labau, Maliau, Lokan, and Luasong — supported by a palm oil mill with a processing capacity of 60-90MTs of FFB per hour.
Strong CPO price outlook in 1Q25. We anticipate that CPO prices will maintain their strong momentum in 1Q25, projected to hover between RM4,500 and RM5,000/MT (vs FY24 average of RM3,400). The positive view is driven by: (i) weakened palm production in the short term due to seasonally low yields and the exceptionally heavy rainfall in both Malaysia and Indonesia; (ii) Indonesia’s firm commitment to increase its biodiesel mandate by 5 percentage points to B40 starting in January 2025, which will stimulate palm oil consumption and reduce palm oil stockpiles; and (iii) heightened demand ahead of Ramadan in March 2025.
Discounted valuation. At RM1.64, INNO is trading at a trailing of P/E 11.8, representing a 35% discount to KLPLANT of 18.4x. The stock is further supported by an appealing DY of 7.35%. Given this discount, we deem INNO as a good proxy to ride on the strong CPO price outlook in 1Q25.
Bullish turnaround. INNO has exhibited a strong rebound at the RM1.55–1.59 support level, forming a double bottom pattern. With a MACD golden cross and improving RSI stochastic readings, the stock appears primed for further upside, targeting RM1.82–1.84 and RM1.89 levels. Cut loss at RM1.54.
Collection range RM1.57-1.58-1.59
Upside targets: RM1.82 -1.84 -1.89
Cut loss: RM1.54
Source: Hong Leong Investment Bank Research - 22 Jan 2025
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