RHBInvest Research

Tuesday, October 11, 2011

Top Story: Plantation – Back in La Niña territory Overweight

Sector Update

¨ Despite the festive Hari Raya season, Malaysia’s CPO production rose by a surprisingly strong 12.1% mom in Sept, while exports fell by 8.8% mom. On a yoy basis, production rose by 19.6% yoy, while exports rose by 5.1% yoy. As a result of the larger mom increase in production vis-a-vis exports, closing CPO stock levels rose by 12.4% mom to 2.12m tonnes in Sep (from 1.89m tonnes in Aug). We believe the strong production numbers seen in Sep despite the festive period may indicate that production in Malaysia could have reached its peak earlier than expected, and that production may not necessarily surpass these levels in the remaining months of the year. Should production continue to be strong and exports weak, we believe price weakness for CPO could remain for the short term. As a result of the higher CPO stock levels, the stock/usage ratio in Sep rose to 11.1% (from 9.96% in Aug), above the 9-year average of 9.1%.

Corporate Highlights

Parkson: PRA listing aims to raise S$115m Market Perform

Company Update

¨ In its circular to shareholders, we highlight: 1) PRA will issue new shares of up to 18.9% of its enlarged share capital and expects to raise a minimum of SG$115m or RM281m in proceeds; and 2) PHB will offer up to 13.1% of the enlarged share capital and expects to raise a minimum of SG$56m or RM137m.

SP Setia: Some clarity on management’s direction Market Perform

News Update

¨ A joint statement was issued by Tan Sri Hamad Kama Piah Che Othman (President and Group Chief Executive of PNB) and Tan Sri Liew that PNB has given its reassurance that it wants to work with the existing management of SP Setia. Tan Sri Liew will continue to lead the company as CEO. PNB’s involvement in its investee companies is mainly through board representation.

Proton: Sale of Lotus Stake? Market Perform (up from UP)

News Update

¨ According to Autosport UK, speculation was circulating during last weekend’s Japanese Grand Prix, that Genii Capital could be buying a stake in Group Lotus.


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