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Palm Oil Sector

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Submitted By ganrian
Words 26936
Pages 108
11 March 2011

Food Producers

Palm Oil – Extracting Value

Rachel Galvez +44 20 7444 0679 rachel.galvez@religarecm.com Palm Tree Nursery

Palm Oil Sector – Extracting Value We launch coverage on the London listed Palm Oil sector with a positive view as we believe the industry will continue to grow and current production will struggle to meet global demand. In our view, companies (such as the ones under our coverage) that have; agricultural land rights in equatorial regions (where oil palms thrive), industry expertise, experienced management teams, and access to capital, have defensible competitive advantages and are likely to experience earnings growth and margin expansion going forward. New Britain Palm Oil (NBPO LN, BUY, 1,197p price target, 23% upside) NBPO produces sustainable and traceable Palm Oil in Papua New Guinea (PNG), which it sells to European markets. We believe the company’s competitive advantages, (the traceability and sustainability of its oil, above industry average yields, land and other assets, management team and industry relationships) will enable it to increase sales, expand margins and maintain a market leading position going forward. Asian Plantations (PALM LN, BUY, 345p price target, 29% upside)

Source: MP Evans

Palm Tree Plantation

Asian Plantations is involved in the acquisition and development of Palm Oil plantation land in Sarawak, Malaysia. We believe the company will be able to execute on its strategy (acquiring undeveloped land and selling it when it reaches full maturity) given its competitive advantages (land rights, mill technology and management) and its track record since listing on AIM in November 2009. Equatorial Palm Oil (PAL LN, BUY, 38p price target, 28% upside) Equatorial Palm Oil is involved in the acquisition and development of Palm Oil plantation land in Liberia, West Africa. In our view, the shares

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