Plantation stocks continue to shine

Over the past few weeks, we had continued to recommend plantation stocks, Golden Agri and First Resources. Golden Agri broke out of the $1.0-1.03 price range on Friday and rallied to a high of $1.10 before closing at $1.08. Price chart shows a clear breakout and that too on high volume, even after excluding the 113m married deal at closing. Pullbacks will be limited to $1.04-1.05. Next resistance would be $1.24-1.25 range. Interestingly, this rally comes even while CPO futures is consolidating. Further momentum will be likely once CPO breaks out of the consolidation. Investors could alternatively look at First Resources, which has so far lagged behind. The comparative chart (figure 2)shows that while Golden Agri and Wilmar had gained between 60-75% over a 1year period, First Resources has lagged substantially. As such, we believe downside risk for the stock is quite low at this stage and recommend a buy at $1.15-1.20.


Figure 1- Golden Agri

Figure 2- plantation stocks

DISCLAIMER:
We have based this document on information obtained from sources we believe to be reliable, but we do not make any representation or warranty nor accept any responsibility or liability as to its accuracy, completeness or correctness. Expressions of opinion contained herein are those of UOB Kay Hian Research Pte Ltd only and are subject to change without notice. Any recommendation contained in this document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. This document is for the information of the addressee only and is not to be taken as substitution for the exercise of judgement by the addressee. This document is not and should not be construed as an offer or a solicitation of an offer to purchase or subscribe or sell any securities. UOB Kay Hian and its affiliates, their Directors, officers and/or employees may own or have positions in any securities mentioned herein or any securities related thereto and may from time to time add to or dispose of any such securities. UOB Kay Hian and its affiliates may act as market maker or have assumed an underwriting position in the securities of companies discussed herein (or investments related thereto) and may sell them to or buy them from customers on a principal basis and may also perform or seek to perform investment banking or underwriting services for or relating to those companies.

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