UOB KH upgrades plantation sector, Maybank cautious on NOL

Excerpts from analyst reports

UOB Kay Hian upgrades palm oil sector to 'overweight' on CPO price recovery

Supply drying up: We upgraded the regional plantation sector to OVERWEIGHT from UNDERWEIGHT in view of the recovery in CPO prices on the back of easing concern over high inventory levels and a slower production growth in 2014.

The hot weather and the ringgit depreciation also provide short-term support to CPO prices.

We raised sector valuation to upcycle valuation given the improving CPO price uptrend momentum.
 

 Stock picks. For sector exposure, we prefer: a) young and efficient upstream players like Bumitama and First Resources, b) integrated players with catalysts like Wilmar, and c) companies with high beta to CPO prices. 

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Maybank Kim Eng cautious on Neptune Orient Lines

Analyst: Derrick Heng

Source: BloombergWe assume coverage of NOL with a HOLD rating and TP of SGD1.25 based on FY13-14E P/BV of 1.1X (long term average: 1.2X).
 

 Fundamentally, we believe that the container shipping industry is near its cyclical trough and expect better times ahead as the supply overhang diminishes over the next few years.
 

 However, we remain cautious in our recommendation as the prospect of a third consecutive year of losses in FY13 (on our estimates) will likely weigh on sentiment towards the stock, especially as we believe consensus expectations of a profitable FY13 will be missed.