Among the companies that are also public listed, include FGV Holdings Bhd, Kuala Lumpur Kepong Bhd and IJM Plantations Bhd.
“As most companies have diversified exposures in other districts, states or countries, the impact is smaller as a group. Furthermore, March has traditionally been the second-lowest output month since 2009, and harvesters can play catch up when harvesting activities resume on day 8,” the research house said in a note.
It maintained an “unchanged” call on the plantation sector.
A recent news report said that Sabah, the largest palm oil-producing state in the country, will temporarily suspend palm operations in three districts after seven plantation workers tested positive for Covid-19.
All oil palm plantations in Tawau, Lahad Datu, and Kinabatangan will suspend its operations beginning from March 25-31, while the operation of palm processing factories will be suspended from March 27-31.
In 2019, Sabah accounted for 6.6% of global palm oil output, producing about five million metric tonnes crude palm oil.
Maybank IB said in any case, share prices of most plantation stocks have been severely bashed down year-to-date due to Covid-19 fear and as such, it believed the impact have been priced in.
“However, the greater concern is if the suspension extends beyond seven days or extends to more areas in Malaysia (or even Indonesia),” it added.
Should that happen, palm oil output will be further curtailed but this will likely be compensated by higher CPO price (ceteris paribus) given the present tight supply. – March 25, 2020, Bernama
