Thursday, May 20, 2010

IOICORP : Slow Growth, but Trading at Premium?

Despite the recent selldown, we think IOI Corp is still pricey at 20x forward earnings, which we think is at the top end of the PE range in a post-bubble environment. This is despite IOI Corp being the world’s most profitable planter, generating USD2255 per mature hectare. For exposure to integrated planters, we prefer Singapore-listed Wilmar International (Neutral TP SGD7.00), which is larger and yet cheaper than IOI. Investors betting on a rebound in palm oil price should buy an inexpensively valued, upstream heavy player such as Golden Agri (Trading Buy, TP SGD0.635), the stock price of which tends to react better to an upswing in palm oil price.

Malaysia : Majority Plantation Stocks very expensive.
Singapore/Indonesia :  Majority Plantation Stocks in Indonesia trading at cheap valuation.

Underweight Malaysia Plantation, Focus on Indonesia Planter...It could give you better return in long run.

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