Southeast Asian Plantation Sector Likely to Post Weak 1Q Earnings — Market Talk

Southeast Asian planters' earnings could weaken sequentially and year over year due to lower seasonal output and softer crude palm oil prices, RHB IB analysts say in a note. However, earnings are expected to recover in 2Q on stronger output and higher crude palm oil prices, they add. Malaysia's stockpile levels are likely to remain broadly steady in the near term, as higher seasonal production is expected to be offset by stronger buying before Indonesia's B50 biodiesel mandate takes effect in July. RHB maintains a neutral rating on Southeast Asian plantation sector, while keeping a tactically positive trading stance. Its top picks are Johor Plantations, Sarawak Oil Palms, IOI Corp., London Sumatra Indonesia, SD Guthrie and First Resources. (yingxian.wong@wsj.com)