Crude palm oil (CPO)
Crude palm oil (CPO) prices will continue to remain firm and drive the growth of the plantation industry this year amid high crude oil prices and tight supply of cheaper energy sources. DBS Vickers is maintaining an upward bias on CPO for 2008, with an average price of RM2,700 to RM3,000.
Stock picks
In spite of the industry’s volatility, the plantation sector remains attractive to investors. Plantation giants like Sime Darby Bhd, IOI Corporation Bhd, Kuala Lumpur Kepong Bhd are among the top picks among fund managers and brokers.
He added that investors were also keen to invest in second-tier plantation stocks such as United Plantations Bhd, Tradewinds Bhd and Asiatic Development Bhd based on their cheaper valuations.
Oil and gas players
In 2008, more upside is seen for the local oil and gas players on the back of strong oil prices, premium rates on chartered vessels for upstream activities, upcoming infrastructure projects and deep-sea exploration activities. On average, they said oil prices would remain high next year at between US$75 per barrel and US$88 per barrel (RM251.25 and RM294.80), on the back of tight supply and high demand for fuel that would further boost both upstream and downstream activities worldwide.
Stock picks
Favoured stocks included KNM Group Bhd, Wah Seong Corporation Bhd, Alam Maritim Resources Bhd, Muhibbah Engineering (M) Bhd, Eastern Pacific Industrial Corporation Bhd (EPIC), Petra Perdana Bhd, Tanjong Offshore Bhd, Dialog Group Bhd and Kencana Petroleum Bhd.
Among its top picks, the research house favoured KNM for its compounded annual growth rate (CAGR) of 57% for FY07 to FY09F, high return on equity (ROE) of 35% and commendable contract replenishment with high order book of RM2.5 billion. It has a buy call on KNM with a target price of RM8.30.
Steel price
Steel price will keep increasing and the price will increase about 20.35%to 20.91%. Due to the high demand of steel, especially china, in year 2008 , government will increase again the steel price.
Stock picks
Masteel and Ornastel
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