Plantation Companies - DBS Research 2017-09-13: CPO Stockpile Still In Healthy Range

Plantation Companies - DBS Vickers 2017-09-13: CPO Stockpile Still In Healthy Range Singapore Plantation Companies Plantation Stocks Review INDOFOOD AGRI RESOURCES LTD. 5JS.SI WILMAR INTERNATIONAL LIMITED F34.SI BUMITAMA AGRI LTD. P8Z.SI FIRST RESOURCES LIMITED EB5.SI GOLDEN AGRI-RESOURCES LTD E5H.SI

Plantation Companies - CPO Stockpile Still In Healthy Range

  • Malaysia’s August ’17 inventory reached 1.94m MT, in line with our and consensus forecast.
  • CPO export to China and India climbed m-o-m.
  • Flat m-o-m CPO output trend also supported stockpile.
  • Reiterate BUY on Astra Agro (AALI), London Sumatra (LSIP), Bumitama Agri (BAL), First Resources (FR) and TSH Resources (TSH).



August CPO stockpile within our and consensus forecast.

  • Malaysia’s August 2017 CPO inventory climbed 33% y-o-y from low base effect last year to 1.94m MT (+9%m-o-m), largely in line with our and consensus forecast of 1.9m MT and 2.0m MT. The steady CPO stockpile in August supported by steady m-o-m CPO export trend, amid the flat m-o-m CPO output trend in August. 
  • We forecast CPO inventory will remain stable in September at 2.0m MT level.


CPO export to China and India climbed m-o-m. 

  • August 2017 CPO export reached 1.49m MT (-18.4% y-o-y, +6.4% mo-m), also largely in line with our and consensus forecast. Asia market such as India and China were still the key driver of CPO export trend despite the weaker m-o-m export trend from EU countries. 
  • India CPO export reached 183.2k MT (+14% m-om) still on positive momentum despite the import tax hike decision last month. Moreover, we also see the positive CPO export trend on China, which expanded 3% m-o-m to 194.2k MT. 
  • Meanwhile, on the other hand, EU countries CPO export destination dropped by 17% m-o-m to 176.7k MT.


Relatively flat m-o-m CPO output. 

  • August CPO output dropped by 1% m-o-m to 1.81m MT (+6% y-o-y) despite CPO is entering its seasonally high production trend in 2H17, within our and consensus forecast. 
  • The flat m-o-m production trend confirmed that the July significant output expansion was mainly driven by the normalizing working day, instead of the massive yield expansion symptom, which previously concerned by the market.


Reiterate our top picks are AALI, LSIP, FR, BAL and TSH.

  • The firm inventory trend will provide a strong support toward CPO price. A stronger CPO price trend in 2H17 will support our plantation counters’ CPO pricing and earnings performance.
  • We reiterate our top picks of AALI, LSIP, FR, BAL and TSH on their strong yield outlooks.







William Simadiputra DBS Vickers | http://www.dbsvickers.com/ 2017-09-13
DBS Vickers SGX Stock Analyst Report HOLD Maintain HOLD 0.490 Same 0.490
HOLD Maintain HOLD 3.520 Same 3.520
BUY Maintain BUY 0.940 Same 0.940
BUY Maintain BUY 2.130 Same 2.130
NOT RATED Maintain NOT RATED 0.39 Down 0.410



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