KUALA LUMPUR: Analysts didn’t rush in to upgrade their ratings on PLANTATION [] stocks and forecasts on crude palm oil (CPO) prices despite a lower-than-expected stockpile in November 2009.

Although lower stockpile signals a positive development for the near-term prices of the commodity, OSK Research maintained its underweight call while CIMB Research, AmResearch and ECM Libra stayed neutral on the sector.

All research houses retained their CPO price forecasts, which ranged from RM2,240 per tonne to RM2,300 for 2009, RM2,380 to RM2,500 for 2010 and RM2,440 to RM2,700 for 2011.

ECM Libra said there were risks that investors should keep tabs on — the rain levels in the low season starting this month, soy planting progress in Argentina, El Nino weather, crude oil prices and the corresponding US dollar.

“We believe these key developments will induce the necessary swings in CPO prices in the year,” it added.

Furthermore, it said although stock levels declined in November, exports were flattish month-on-month.

“Looking forward, we do not expect export numbers in 2010 to be exceptionally higher like they were in 2009. To note, exports are so far, for the first 11 months of 2009, 6% higher than that in 2008,” ECM Libra said in a note.

The investment bank, which has a target average selling price for CPO of RM2,400 per tonne for 2010, viewed plantation stocks as expensive.

It retained hold and sell calls on all the plantation counters under its coverage, which include BOUSTEAD HOLDINGS BHD [ ] (sell) and TSH RESOURCES BHD [] (hold).

OSK Research, meanwhile, said with valuations at “uncompelling” levels, it maintained its underweight stance on the sector.

It said the risk of CPO inventory crossing the two million-tonne mark would emerge again in the second quarter of next year when supply starts to go up.

The research house reiterated its view that the average CPO price would be lower next year due to supply normalisation of both palm oil and soybean oil.

CIMB Research, meanwhile, maintained its CPO price targets at RM2,240 per tonne for 2009, RM2,380 for 2010 and RM2,450 for 2011.

It preferred Singapore-listed planters for their more appealing valuations.

CIMB’s picks in the region remained with Golden Agri Resources Ltd, Wilmar International Ltd, SIME DARBY BHD [], Astra Agro Lestari Tbk, London Sumatra Indonesia Tbk and Sampoerna Agro Tbk.

HwangDBS, meanwhile, cautioned investors to remain selective, as based on its estimates, most local plantation stocks were trading at levels that had already priced in high CPO price expectations next year.

It also expected both soybean and palm oil prices to moderate once soybean oil inventories get replenished post South American harvests.

It favoured sector laggards such as Indonesia’s First Resources Ltd, Wilmar and Sampoerna Agro, which are fundamentally sound but yet overlooked in their earnings growth potential.

HwangDBS’ forecasts for CPO prices were unchanged at RM2,300 per tonne for 2009, RM2,380 for 2010 and RM2,440 for 2011.

RHB Research, perhaps the most optimistic among the lot, kept its outperform call on the sector while maintaining its CPO price targets at RM2,300 per tonne for 2009, RM2,500 for 2010 and RM2,700 for 2011.

It noted the current CPO inventory level of 1.93 million tonnes in November represented only about one-and-a-half months of average historical monthly consumption.

It expected inventory levels to continue to fall through to June-2010, as production levels taper off from the peak.

RHB said every RM100 per tonne rise in CPO prices would benefit purer plantation players like IJM PLANTATIONS BHD [ ] (IJMP) and Genting Plantations Bhd the most, compared to more diversified firms like Sime Darby Bhd and IOI Corp Bhd.

Based on Bloomberg data, IJMP is trading at a trailing price-to-earnings ratio of 25.12 times, Genting Plantations at 23.71 times, Sime 25.64 times, IOI Corp 28.25 times, Boustead Holdings 8.08 times and TSH Resources at 23.31 times.

Meanwhile, regional peers Wilmar is trading at 16.13 times, Golden Agri at 14.77 times, Astra Agro at 21.38 times and First Resources at 8.38 times.