The flooding in Peninsular Malaysia, whilst an unfortunate event for both the public and companies there, has pushed Sarawakian palm oil planters in a more positive light among its peers. The current flood hitting the east coast of Peninsular Malaysia is believed to indirectly benefit Sarawakian plantation players in the short term as they stand to gain from higher prices for their crop. CIMB Investment Bank Bhd’s analysts Ivy Ng told The Borneo Post on Friday that, “At this moment, it would appear that East Malaysian estates stand to benefit from higher prices for their crop due to weaker production from the east coast states.” The worst flood along the East Coast due to the monsoon season has affected fresh fruit bunch harvesting and milling activities as well as transportation services, said Public Investment Bank Bhd (PublicInvest Research) on Friday. The flood situation in Kelantan,Terengganu, Pahang, Perak and Johor – which collectively account for 40.8 per cent of Malaysian oil palm plantation – has improved on Friday. These five states also contribute about 44 per cent of total CPO production in Malaysia. This incident has negatively impacted players such as Felda Global Ventures Holdings Bhd (FGV), said PublicInvest Research, adding that there was “too much negative views” for FGV. “In contrast to other plantation counters, FGV’s share price had unexpectedly tanked 34 per centover the last one month despite the recovery of CPO prices. “Besides the selling pressure from two major shareholders, Employees Provident Fund and Kumpulan Wang Persaraan, the group’s earnings were also clouded by the exposure of plantation land in flood-hit area, which is likely affect its upcoming quarterly results. “As of December 29 the group estimated a total loss of RM21 million due to flood damages and loss of FFB production totaling 11,00 metric tonnes, which is about 0.2 per cent of estimated annual production. “Based on the current share price, the company is trading at only 16 times to our FY15 forecasts compared to industry average of 18 to 19 times.” When asked on the floods being a potential catalysts for West Malaysian planters to look elsewhere to safeguard their investment, Ng believed a lot of planters are keen to expand their estates at the right price.
Posted on: Tue, 06 Jan 2015 03:50:50 +0000
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