Plantation Companies
Winter sale coming

Malaysia’s Aug13 palm oil output of 1.735m MT was in line with forecast. Strong export of 1.524m MT (+7% m-o-m) was offset by 25% m-o-m drop in domestic intake; keeping stockpile flat at 1.666m MT –but expect reaccumulation. We do not expect the Indian government to raise import duties on refined oils. If realised, Indonesian biodiesel demand could have positive impact on CPO prices. TPs under review for FX rate revisions. Top picks: AALI, IOI, FR, BAL.

Kimlun Corporation; Trading Buy; RM1.92
Targeted Resistance Thresholds: RM2.03 (immediate), RM2.16 (next); KICB MK
Set for a technical push

The share price of Kimlun is looking technically interesting now. The stock might have already hit a recent bottom after rebounding from a trough of RM1.68 in late Aug. More significantly, riding on the positivetechnical momentum, the shares are poised to break away from a descending trend line after closing at RM1.92 yesterday.

On the chart, Kimlun’s share price could be making its way to challenge the resistance targets of RM2.03 (initial) and RM2.16 (subsequent). This offers a potential upside range of 6%-13%. Trading Buy. On the other hand, we have pegged our key support levels at RM1.80 (immediate) and RM1.69 (next), representing downside risks of 6%-12%.

Meanwhile, fundamental-driven investors will probably like Kimlun too. Earnings visibility is fairly high given the Group’s strong orderbook of RM1.3b in construction projects (mainly building works) and M0.4b for the supply of concrete products as of end-Jun 2013, which have grown further by an incremental RM0.7b between Jul and early Sep.

Source: HwangDBS Research - 11 Sep 2013