11 March 2022

Data Release: Feb 2022 MPOB Stats

HLIB Research
PP 9484/12/2012 (031413) Plantation
Chye Wen Fei
wfchye@hlib.hongleong.com.my Lowest stockpile since Jul-21
(603) 2083 1712
Palm oil stockpile declined further, 2.1% MoM to 1.52m tonnes in Feb-22, as lower

OVERWEIGHT
opening stocks, imports, and output (as a result of seasonal factor and persiste nt
labour shortage) more than offset a 5.3% decline in exports. Maintain 2022-24
(Maintain) CPO price assumptions of RM4,300/3,300/3,300 per tonne. We believe palm oil
prices will remain at elevated levels (possibly until 1H22). We maintain our
KL Plantation Index OVERWEIGHT stance on the sector, underpinned by good near term earnings
Pts Pts
prospects (arising from elevated CPO prices) and commendable valuations. Top
9,000 1,750 picks are FGV Holdings (BUY; TP: RM2.43), IOI Corp (BUY; TP: RM5.01), KLK
8,500
(BUY; TP: RM32.43), and Sime Darby Plantation (BUY; TP: RM5.95).
1,690
8,000
1,630 DATA HIGHLIGHTS
7,500
1,570
7,000 Stockpile continued to trend down. Palm oil stockpile remained on downtrend (for
6,500 KLPLN (LHS) KLCI (RHS)
1,510 the fourth consecutive month), declining by 2.1% MoM to 1.52m tonnes in Feb-22, as
lower opening stocks, imports, and output more than offset a 5.3% decline in exports.
6,000 1,450
Jan-00 May-21 Jul-21 Sep-21 Nov-21 Jan-22 The stockpile came in above Bloomberg consensus median estimate of 1.35m tonnes,
due mainly to lower-than-expected exports.
Stock Rating
Rating Price Target Lowest output since Feb-21. Total output fell for the fourth consecutive month, by
CBIP HOLD 1.48 1.43 9.3% MoM to 1.14m tonnes in Feb-22, due mainly to seasonal factor (i.e. shorter
FGV BUY 1.95 2.43 working days) and persistent labour shortage.
Genting Plt. BUY 8.98 9.69
Hap Seng Plt. HOLD 2.80 2.70 Exports remained on downtrend too. Exports fell for the third consecutive month, by
IOI Corp BUY 4.30 5.01
KLK BUY 26.20 32.43 5.3% MoM to 1.1m tonnes in Feb-22, dragged mainly by lower exports to India (-18.3% )
Sime Plt. BUY 5.18 5.95 and EU (-8.2%). While exports to China picked up by 17.2% MoM to 88k tonnes in Feb-
TSH HOLD 1.64 1.58 22, this was due mainly to the low base effect. We believe lower exports to key
destinations were due mainly to seasonal factor (as winter season typically slows palm
oil demand from China) and demand destruction arising from high palm oil price.

Exports for the first 10 days of Mar-22. Preliminary data from independent cargo
surveyor Amspec indicated that palm oil exports rose by 15.6% MoM to 370.5k tonnes
during the first 10 days of Mar-22.

HLIB’s VIEW

Forecast. Maintain 2022-24 CPO price assumptions of RM4,300/3,300/3,300 per

tonne. We believe palm oil prices will remain at elevated levels (possibly until 1H22),
supported by (i) weaker production outlook for corn and soybean in South America, (ii)
Indonesian government’s recent move to expand its export permit requirement for all
palm oil products including derivatives, which will likely disrupt palm oil supply chain,
and (iii) geopolitical tension, which will likely result in protracted fertiliser supply (whic h
may result in planters (in particular smallholders) reducing fertiliser application to oil
palms, hence derailing the anticipated yield recovery. Over the longer term, we continue
to believe that a pullback in CPO price will materialise when palm oil output recovers ,
which in turn hinges on the entrant of foreign workers into Malaysian shores.

Maintain OVERWEIGHT. We maintain our OVERWEIGHT stance on the sector,

underpinned by good near term earnings prospects (arising from elevated CPO prices)
and commendable valuations. We take this opportunity to downgrade our ratings on
Hap Seng Plantations and TSH Resources to HOLD (from Buy earlier), as upside has
diminished following recent share price performances. Top picks are FGV Holdings
(BUY; TP: RM2.43), IOI Corp (BUY; TP: RM5.01), KLK (BUY; TP: RM32.43), and
Sime Darby Plantation (BUY; TP: RM5.95).

1 HLIB Research l www.hlebroking.com

Plantation l Data Release: Feb 2022 MPOB Stats
Figure #1 Monthly Data
Feb-21 Jan-22 Feb-22 mom yoy YTD 2021 YTD 2022 yoy
000 tonnes 000 tonnes 000 tonnes % % 000 tonnes 000 tonnes %
Opening stocks 1,324.6 1,614.6 1,551.2 -3.9 17.1 1,265.7 1,614.6 27.6
Imports 87.3 70.6 149.8 112.2 71.6 252.5 220.4 -12.7
Production 1,108.2 1,253.6 1,137.4 -9.3 2.6 2,234.7 2,391.0 7.0
- Pen. Malaysia 625.9 639.8 633.6 -1.0 1.2 1,208.6 1,273.3 5.4
- East Malaysia 482.3 613.8 503.9 -17.9 4.5 1,026.1 1,117.7 8.9
Exports 896.6 1,159.6 1,097.9 -5.3 22.4 1,844.2 2,257.4 22.4
- CPO 234.5 200.3 201.0 0.4 -14.3 427.4 401.3 -6.1
- PPO 665.9 959.3 896.9 -6.5 34.7 1,420.5 1,856.2 30.7
Domestic Use 317.5 228.0 222.3 -2.5 -30.0 602.7 450.3 -25.3
Ending stocks 1,306.0 1,551.2 1,518.3 -2.1 16.3 1,306.0 1,518.3 16.3
MPOB; HLIB Research

Figure #2 Exports to Major Destinations

Feb-21 Jan-22 Feb-22 mom yoy YTD 2021 YTD 2022 yoy % of Total Exports
000 000 000 % % 000 000 % YTD 2021 YTD 2022
tonnes tonnes tonnes tonnes tonnes
China 83.8 75.1 88.0 17.2 5.1 197.4 163.1 -17.4 10.7 7.2
India 162.1 225.4 184.1 -18.3 13.6 305.3 409.5 34.1 16.6 18.1
EU 108.1 121.0 111.1 -8.2 2.8 205.4 232.1 13.0 11.1 10.3
Pakistan 23.7 29.6 51.0 72.4 115.4 65.3 80.6 23.3 3.5 3.6
USA 20.9 2.9 6.1 111.9 -70.7 65.6 9.0 -86.2 3.6 0.4
MPOB; HLIB Research

Figure #3 Monthly Output & End Inventory

Production Closing Stock

3,500

3,000
'000 tonnes

2,500

2,000

1,500

1,000
Jul-16

Jul-20
Jul-13

Jul-14

Jul-15

Jul-17

Jul-18

Jul-19

Jul-21
Jan-13

Jan-14

Jan-15

Jan-16

Jan-17

Jan-18

Jan-19

Jan-20

Jan-21

Jan-22
Oct-13

Apr-14

Oct-14

Apr-15

Oct-15

Apr-16

Oct-16

Apr-17

Oct-17

Apr-18

Oct-18

Apr-19

Oct-19

Apr-20

Oct-20

Apr-21

Oct-21
Apr-13

MPOB; HLIB Research

Figure #4 Peer comparison

Mkt Cap Price Target Rating FYE P/E (x) P/B (x) Yield (%)
(RM m) (RM) (RM) FY21 FY22 FY21 FY22 FY21 FY22
CBIP 730 1.48 1.43 HOLD Dec 10.1 11.8 1.0 0.9 2.7 2.7
FGV Holdings 7,114 1.95 2.43 BUY Dec 18.9 30.7 1.7 1.6 1.5 1.0
Genting Plts. 8,058 8.98 9.69 BUY Dec 19.3 22.0 1.5 1.4 1.3 1.3
Hap Seng Plts 2,240 2.80 2.70 HOLD Dec 12.0 19.0 1.3 1.2 4.3 3.9
IOI Corp 27,021 4.30 5.01 BUY Jun 24.5 18.6 2.9 2.7 2.4 2.7
KLK 27,955 26.20 32.43 BUY Sep 23.3 32.8 3.3 3.0 2.1 2.1
S. Darby Plt 35,659 5.18 5.95 BUY Dec 14.3 19.8 2.7 2.4 2.9 2.3
TSH Res 2,265 1.64 1.58 HOLD Dec 12.9 18.4 1.6 1.4 0.9 0.9
HLIB Research

2 HLIB Research l www.hlebroking.com

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Stock rating definitions

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Sector rating definitions

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NEUTRAL Sector expected to perform in-line with the market over the next 12 months.
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The stock rating guide as stipulated above serves as a guiding principle to stock ratings. How ever, apart from the abovementioned quantitative definitions, other qualitative
measures and situational aspects will also be considered when arriving at the final stock rating. Stock rating may also be affected by the market capitalisation of the individual
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