馬來西亞種植園：期待一個更光明的2020

1、28 October 2019EQUITIESQuick SummaryBBG tickerUnitSDPL MKKLK MKMarket capUSD mil7,8925,535Current Price28 October 2019EQUITIESQuick SummaryBBG tickerUnitSDPL MKKLK MKMarket capUSD mil7,8925,535Current PriceRM4.7221.60Target PriceRM5.3023.00Upside%12.36.5TSR%13.68.630-day ADTVUSD mil2.05.6FY20E EV/ha

2、USD16,34427,710FY20E PERx43.424.7FY20E PBvx2.11.9FY20E ROE%4.77.9Malaysia PlantationsKey points We expect the CPO price to recover from the current levels of RM2,100/mt to RM2,500/mt in CY20 due to tighter S/U ratios.Key points We expect the CPO price to recover from the current levels of RM2,100/mt

3、 to RM2,500/mt in CY20 due to tighter S/U ratios. We initiate coverage with an OP rating on Sime Plant and N rating on KLK. Sime Plant has plenty of room to improve and is sensitive to the CPO price, bringing an attractive risk-reward in a rising CPO price trajectory.Source: Bloomberg, Macquarie Res

4、earch, October 2019MQ CPO price forecast vs. ConsensusRM/tInitiate coverage on Malaysia Plantations sector on a positivenoteGoing into CY20E we expect the CPO price to rebound to RM2,500/mt, andwe2,8002,6002,4002,2002,000Oct-191,800Oct-19Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Jan-20 Apr-20 Jul-20 Oct-20

5、 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22Jul-222,7342,392believe interest in upstream Malaysian Plantations names will pick up, as they have the highest earnings leverage to CPO prices. The tightening in the veg. oil complex in CY20E, the first since 2016, has underscored our conviction of a more s

6、upportive CPO fundamentals in CY20E. The CPO price hit a 5-year low in 2Q19, taking it close to the cost of production of the less-efficient players. However, we believe the CY19E earnings impact is already priced in the Bursa Plantations Index has dropped by 11% from its CY19 high. Against this bac

7、kdrop, we initiate coverage on Sime Darby Plantations and Kuala Lumpur Kepong. Our top picks in ASEAN Plantations are First Resources (FR SP, S$1.56, Outperform, TP:Source: Bloomberg, Macquarie Research, October 2019in 27,71029,32939,52927,71029,32939,52916,34417,91215,95616,34417,91215,95630,00020,

8、00010,0000S$1.90), London Sumatra (LSIP IJ, Rp1,335, Outperform, TP: Rp1,620) and Sime Darby Plantation (SDPL MK, RM4.72, Outperform, TP: RM5.30).CPO price rebound YTD inventory contraction not a red herringOur CPO price/mt targets are CY20E: RM2,500 and CY21: RM2,734. Throughout CY19E, we saw inven

9、tory contracting from 3.0mn mt (Jan) to 2.4mn mt (Sept) and cumulative 9MCY19 exports growing by 15.3% YoY. We think the trajectory will continue well into CY20E, underpinned by the tightening in the veg. oil complex. Despite the upbeat outlook in CY20E, we believe price volatility will continue fro

10、m now till 2Q20E before seeing a meaningful rally. Post first-half harvesting, coupled with the festive season (Ramadhan starting end-April 2020),Sime PlantKLKPlantIOIcould yield lower production and thus drive a further drop in inventory, we believe.EV/ha(currentprice)EV/ha (target priceimplied)Sou

11、rce: Bloomberg, Macquarie Research, October 2019Inside HYPERLINK l _TOC_250004 Looking forward to abrighter20203 HYPERLINK l _TOC_250003 Malaysia CPO improvingfundamentals7 HYPERLINK l _TOC_250002 Stock picksand valuation9 HYPERLINK l _TOC_250001 Financialsummary13 HYPERLINK l _TOC_250000 SimeDarbyP

12、lantation14KualaLumpur Kepong28AnalystsMacquarie Capital Securities (Malaysia) Sdn. Bhd.Aiman Mohamad +60 3 2059 8986 HYPERLINK mailto:aiman.mohamad aiman.mohamadMacquarie Capital Securities (Singapore) Pte. LimitedConrad Werner +65 6601 0182 HYPERLINK mailto:conrad.werner conrad.wernerInitiate on S

13、ime Plant and KLK; we prefer Sime PlantSime Plant (OP; TP RM5.30) We expect op stats to improve, and this will pare down its costs and improve profitability. We estimate EPS to grow at a 26% CAGR in FY19-22E. Operating at a higher cost of production to peers, Sime Plant has a high sensitivity with a

14、 25% impact to EPS for every RM100 movement in the CPO price giving it the highest earnings leverage during a rising CPO pricetrajectory.KLK (N; TP RM23.00) We believe KLK remains the safest play for the Malaysia Plantation sector but not so during a rising CPO price trajectory sensitivity of 10% fo

15、r every RM100 movement in the CPO price. We factored in a CPO price recovery, better op stats and earnings growth of a 10% CAGR in FY19-22E; all told, we believe the upside is pricedin.Headline risk India banning Malaysian CPO is our main concernWe believe the main downside risk is that India begins

16、 to gradually stop CPO imports from Malaysia due to the current political tensions. India is the biggest importer of Malaysian CPO, with a total share of 28% of YTD Malaysian CPO exports. Losing India as the key customer could severely hurt the CPO price.Please refer to page 40 for important disclos

17、ures and analyst certification, or on our website HYPERLINK /research/disclosures /research/disclosures.Focus chartsFig 1 CPO: supplydemand in CY19-21E(T 908070Fig 2 Global CPO stock-to-usage (S/U) ratio: tightening further in CY20-21E22202121202018191616142220212120201819161614201560504030201620172

18、0182019E2020E1052021E2020E2019E2018201720162015201420132012201102021E2020E2019E201820172016201520142013201220112021EWorldCPOsupplyWorld CPOdemandCPO S/U10 yr averageSource: USDA, Oil World, Macquarie Research,October2019Source: Bloomberg, Macquarie Research, October2019Fig 3 Malaysia S/U ratio tight

19、ened after holding aburdensome 3mn mt stocks in Jan 19 to 2.4mn mt in Sept 19Fig 4 CPO price recovery coupled with better op stats should help Sime Plant improve its profitability18%16%14%12%10%8%6%4%2%Dec-10 May-11 Oct-11 Dec-10 May-11 Oct-11 Aug-12 Jan-13 Jun-13 Nov-13 Apr-14 Sep-14 Dec-15 May-16

20、Oct-16 Aug-17 Jan-18 Jun-18 Nov-18 Apr-19RM 1,2001,0551,0459459558697804921,0551,0459459558697804923418006004002000FY19EFY20EFY21EFY22ES/U2011-18avg. S/UKLKSime PlantSource: MPOB, Macquarie Research,October2019Source: Company data, Macquarie Research, October2019Fig 5 Within the ASEAN Plantations sp

21、ace we prefer First Resources, London Sumatera and Sime Plant (in order of preference)NameBbg CodeRec.Price(lcy)12m tgt(lcy)Upside(%)Mkt cap (US$m)19EPER(x)20E21E19EP/B (x)20E21EDivide19End yield 20E21E 19E21ESingaporeFirst ResourcesFR SPOP1.561.9022%1,802.413.317.517.0Golden Agri-ResourcesGGR SPN0.

22、210.2624%1,979.027.410.05.0Wilmar InternationalWIL SPN3.643.40-7%17,345.213.312.512.21.01.01.03.08.08.1Weighted Average14.712.011.71.01.01.0MalaysiaSime Darby PlantationsSDPL MKOP4.705.3013%7,776.5108.145.52.0Kuala Lumpur KepongKLK MKN21.5423.007%5,503.529.824.822.92.07.17.7IOI CorpIOI MKNR4.28n/an/

23、a6,378.433.530.628.13.08.99.3Genting PlantationsGENP MKNR9.90n/an/a2,121.145.62.06.2Weighted Average60.434.67.6IndonesiaAstra Agro LestariAALI IJN10,700.0010,400.00-3%1,425.782.835.31.0London SumatraLSIP IJOP1,270.001,620.0028%588.045.422.817.91.01.01.0Weighted Average71.931.61.0Weighted average39.4

24、23.87.9Source: Bloomberg, Company Data, Macquarie Research, October 2019; prices as at 24 October 2019.Looking forward to a brighter 2020Stars are aligned for a CPO price recovery in 2020Our Head of ASEAN Plantations, Conrad Werner, forecasts CPO S/U to tighten from 18.6% (CY19E) to 16.4% and 14.2%

25、in CY20-21E, respectively. We expect supply growth of +4.2% in CY20E, which is ahead of the supply growth of the overall veg. oil complex at +2.3%. With this we forecast CPO price per mt to average at RM2,500 in CY20E and RM2,734 in CY21E and beyond.In our CPO price forecasts, apart from the S/U rat

26、ios, we also take into account higher soybean oil (SBO) prices and a narrower-than-expected discount of CPO to SBO. Our CPO price forecasting framework is explained further in this report. In our price assumptions, we assume SBO prices per tonne of c.US$690 (CY20E) and c.US$780 (CY21E). We assume a

27、discount of c.US$100-80 across CY20-21E. This reflects the tightening of the CPO S/U ratio that we expect to occur meaningfully in CY20E.Fig 6CPO supply and demand: stock-to-usage comes off more meaningfully in 2020E on ournumbersTons mn201120122013201420152016201720182019E2020E2021EProduction50.553

28、.856.659.962.859.268.272.075.278.481.5- Indonesia24.326.928.731.533.432.436.841.043.145.046.9- Malaysia18.918.819.219.720.017.319.919.519.920.320.7- Other11.511.512.313.113.9Demand48.752.557.759.460.962.865.382.8- Food36.839.342.843.946.146.848.451.353.355.357.3- Oleochems5.96.0- Biodiesel10.28.710.

29、711.014.816.517.919.0Stock-to-Use (%)20.222.418.219.621.116.420.021.418.616.414.210-year average19.319.319.319.319.319.319.319.319.319.319.3Growth201120122013201420152016201720182019E2020E2021EProduction10.2%6.5%5.1%5.9%4.7%-5.6%15.2%5.6%4.4%4.2%4.0%- Indonesia10.0%10.7%6.8%9.7%6.0%-3.0%13.6%11.4%5.

30、0%4.5%4.3%- Malaysia11.3%-0.7%2.3%2.4%1.5%-13.2%15.0%-2.0%2.0%2.0%2.0%Demand4.7%7.7%10.0%2.9%2.6%3.0%4.0%7.4%8.5%4.6%4.1%- Food2.5%6.8%8.9%2.5%5.0%1.4%3.5%6.1%3.9%3.7%3.5%- Oleochems-3.6%8.2%-9.7%17.0%-14.0%11.5%2.5%2.5%2.5%2.5%- Biodiesel-15.7%16.7%12.8%-15.3%23.9%2.4%35.0%11.4%8.1%6.4%Avg CPO px (

31、US$/T)1,071928755739559638648555500610675Avg CPO px (RM/T)3,2812,8662,3782,4162,1632,6452,7862,2342,0702,5002,734Source: USDA, Oil World, Company data, Macquarie Research, October 2019Fig 7 CPO: supplydemand in CY19-21E(T 908070Fig 8 Global CPO stock-to-usage (S/U) ratio: tightening further in CY20-

32、21E2221202120201819161614(%) 2522212021202018191616142015605040302016201720182019E2020E1052021E2020E2019E2018201720162015201420132012201102021E2020E2019E201820172016201520142013201220112021EWorldCPOsupplyWorld CPOdemandCPO S/U10 yr averageSource: USDA, Oil World, Macquarie Research,October2019Source

33、: Bloomberg, Macquarie Research, October2019Fig 9 CPO-SBO price spread (US$/mt)Fig 10 CPO-SBO price discount expected to tighten as the entire veg. oil complex tightens(US$)850800750700650600550500450Oct-19 Jul-19 Apr-19 Jan-19 Oct-19 Jul-19 Apr-19 Jan-19 Oct-18 Jul-18 Apr-18 Jan-18 Oct-17 Jul-17 Ap

34、r-17 Jan-17 Oct-16 Jul-16 Apr-16 Jan-16 Oct-15 Jul-15 Apr-15Jan-15CPO (US$/T)SBO(US$/T)(US$/T) 500-50-250Jan-14Jan-15Jan-16Jan-17Jan-18Jan-19CPO - SBODiff(Spot)Avg+1STD-1 STDSource: Bloomberg, Macquarie Research,October2019Source: Bloomberg, Macquarie Research, October2019SupplyCPO supply has been s

35、urprising to the upside for the last three years on the back of a longer- and better-than-expected yield recovery post 2016s El-Nino, which had severely impacted supply, especially in Indonesia. That said, we think the tailwind is likely to decrease. Assuming our CY19E supply growth stays at +4.4%,

36、the +4.2% supply growth we expect in CY20E is below the annual average for the last 5 years (+4.9%) and 10 years (+5.3%).Beyond CY20E, we expect supply growth to tick down further in CY21E mainly due to ageing estates and a planting slowdown in recent years due to environmental, logistical and legis

37、lative constraints. We also believe that the offsetting impact of replanting with higher yielding seeds is still some distance away.Fig 11 Indonesia and Malaysia to still account for 80% of9%10%41%13%28%global CPOsupplyFig 12 Share of veg. oil production inCY20E9%10%41%13%28%(T 90.080.070.060.050.04

38、0.030.020.010.00.020152016201720182019E2020E2021EIndonesia- Malaysia- OtherPalm (inc PKO) Soybean Rapeseed Sunflower OtherSource: USDA, Oil World, Macquarie Research,October2019Source: USDA, Oil World, Macquarie Research, October2019DemandWe expect more balanced global demand-supply growth in CY19E

39、with demand marginally greater than supply. On the food side, we factored in steady demand growth of 3.7% and 3.5%, respectively.Fig 13 We assume CPO food demand staysrelativelystableFig 14 CPO share of veg. oil fooddemand(kg / cap)9.08.07.06.05.04.03.020152016201720182019E 2020E 2021ECPO Food deman

40、d (kg / capita) CPO share of veg oil Food demand38%36%34%32%30%28%26%24%22%20%40%35%30%25%20%15%10%35%33%34% 34%34% 34%35%35%36% 35%33%34% 34%34% 34%35%35%36% 36%CPO share of veg oil Food demandSource: USDA, Oil World, Macquarie Research,October2019Source: USDA, Oil World, Macquarie Research, Octobe

41、r2019The bigger support should come from the biodiesel side as we forecast a higher utilisation rate of biodiesel, mainly coming from Indonesias B20 initiative. While this could gain more steam after Indonesia has brought forwards its blending target to 30% by end-2019. However, our colleague coveri

42、ng Indonesia Plantations, Richard Danusaputra, believes that despite the good regulatory framework supporting the B30 mandate, execution could be a major drag. Given that the palm-oil- gas oil (POGO) spread has narrowed, we believe it will remain less supportive of higher discretionary blending and

43、this is also exacerbated by EUs introduction of new levies on Indonesian biodiesel in August 2019. That said, per our model, we believe the spill-over from the B20 initiative in Indonesia to increase CPO demand, grows from 7.8mn mt (CY19E) to 8.7mn mt (CY20E) and 9.4mn mt (CY21E). Note that we have

44、not factored in the impact from Indonesias B30 mandate in our model as we deem it too ambitious to be achieved within the proposed timeline.Fig 15 Bigger delta on demand coming from Indonesias mandated biodiesel blending(T 9.08.07.06.05.04.03.02.01.00.0Fig 16 Domestic momentum in Indonesia may conti

45、nue but exports may contract on a weaker oil price outlookStart switching to CPO(US$/T) 400Start switching to CPO3002001000Dec-18Dec-17Dec-16Dec-15Dec-14Dec-13Dec-12Dec-11Dec-10Dec-09Dec-08Dec-07Dec-06Dec-05Dec-04Dec-18Dec-17Dec-16Dec-15Dec-14Dec-13Dec-12Dec-11Dec-10Dec-09Dec-08Dec-07Dec-06Dec-05Dec

46、-04201320142015201620172018 2019E 2020E 2021EPSOnon-PSOElectricityExportGas Oil -CPO Spread US$ 120Source: USDA, Oil World, Macquarie Research,October2019Source: Bloomberg, Macquarie Research, October 2019Fig 17We estimate S/U ratios across all of the veg. oil complex points towards contraction in C

47、Y20E supports the case for a higher CPO priceforecast201120122013201420152016201720182019E2020EUSDA Veg oil S&DBeginning Stocks (1000 MT)17,02519,79323,23622,94324,78325,62921,38220,46022,13921,776Production (1000 MT)149,083158,061161,214171,575177,019176,346188,479198,761203,616208,250Imports (1000

48、 MT)57,13661,99165,55267,23071,05171,03075,40674,89480,44983,313Exports (1000 MT)60,81864,89968,47270,29176,54273,68481,37879,64985,04487,945Domestic Consumption (1000 MT)142,633151,710158,587166,674170,682177,939183,429192,327199,384204,693Ending Stocks (1000 MT)19,79323,23622,94324,78325,62921,382

49、20,46022,13921,77620,701Check19,79323,23622,94324,78325,62921,38220,46022,13921,77620,701Veg. Oil Production growth4.6%6.0%2.0%6.4%3.2%-0.4%6.9%5.5%2.4%2.3%Veg. Oil Consumption growth3.2%6.4%4.5%5.1%2.4%4.3%3.1%4.9%3.7%2.7%Veg. Oil Production growth6,6238,9783,15310,3615,444-67312,13310,2824,8554,63

50、4CPO2,9613,7304,2803,3262,728-3,1836,9926,0493,7192,150SBO2,5071,3385281,8964,0442,2712,2591,3698541,371Other1,1553,910-1,6555,139-1,3282392,8822,8642821,113Veg. Oil Consumption growth4,3659,0776,8778,0874,0087,2575,4908,8987,0575,309201120122013201420152016201720182019E2020EVeg. Oil Stocks-usage14.

51、3%16.3%15.1%15.6%15.4%12.5%11.5%12.1%11.3%10.4%10 yr average13.6%13.6%13.6%13.6%13.6%13.6%13.6%13.6%13.6%13.6%5 yr average15.3%15.3%15.3%15.3%15.3%15.3%15.3%15.3%15.3%15.3%Stocks-usage by oilPalm17.9%18.8%16.1%15.5%16.7%13.5%13.9%16.0%14.7%13.9%Soybean11.0%10.1%9.9%8.8%9.3%7.2%7.1%6.5%6.8%6.5%Rapese

52、ed9.8%13.9%20.8%24.4%24.1%20.0%14.4%11.2%9.3%6.6%Sunflower16.1%24.2%17.4%20.9%18.3%11.0%10.6%10.6%10.2%10.0%Other12.6%12.4%8.6%9.0%7.0%8.6%7.4%9.8%10.2%10.1%Source: USDA, Oil World, Company data, Macquarie Research, October 2019Malaysia CPO improving fundamentalsMalaysian CPO fundamentals pave way f

53、or a CPO price rally but risk of weaker exports from India poses risk on overall CPO priceWe estimate Malaysia accounts for 26% of CPO production in CY20E. Throughout 2019, fundamentals in the Malaysian CPO sector improved where we saw a tapering-off of the inventory levels, demand outgrowing supply

54、 and stronger exports vs. last year. We believe the trend could continue well into CY20E and support the case for a higher CPO price, provided that the issues between Malaysia and India are resolved in the very near future.Fig 18 Malaysia S/U ratio tightened after holding a burdensome 3mn mt stocks

55、in Jan 19 to 2.4mn mt in Sept 19Fig 19 Inventory tapering off, we expect downward trajectory to continue18%16%14%12%10%8%6%4%2%Dec-10 May-11 Oct-11 Dec-10 May-11 Oct-11 Aug-12 Jan-13 Jun-13 Nov-13 Apr-14 Sep-14 Dec-15 May-16 Oct-16 Aug-17 Jan-18 Jun-18 Nov-18 Apr-19(T 3,5003,0002,5002,0001,5001,0005

56、00-Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecS/U2011-18avg.S/UMY Months avg.inv.(2013-18)MY most recent months inv.(2019)Source: MPOB, Macquarie Research,October2019Source: MPOB, Macquarie Research, October2019Fig 20 Malaysia CPO demand-supply balance YTDdemand grew by 14% vs. supplyby9%Fig 21

57、YTD cumulative exports up +15.3%YoY(T 000)2,5002,0001,5001,000500Dec-16 Feb-17 Apr-17 Jun-17 Dec-16 Feb-17 Apr-17 Jun-17 Aug-17 Oct-17 Dec-17 Feb-18 Apr-18 Jun-18 Aug-18 Oct-18 Dec-18 Feb-19 Apr-19 Jun-19Aug-193,5003,0002,5002,0001,5001,0005000MYCPOproductionDemandEnding Stocks (T000)(T 000)2,0001,5

58、001,0005000Dec-13Dec-14Dec-15Dec-16Dec-17Dec-18MY CPO exportsSource: MPOB, Macquarie Research,October2019Source: MPOB, Macquarie Research, October2019Why do Indias CPO imports matter?YTD Indias import of CPO products accounts for 28% of Malaysian palm oil exports. India buys both Malaysian crude and

59、 refined palm oil. The recent political tension between Malaysia and India, which could lead to a trade war, may fuel price volatilities in the coming months, especially with anecdotal evidence that Indian traders have come in solidarity with the government to avoid purchases from Malaysia. We belie

60、ve until this situation is resolved, we could see further CPO price volatility, with a downside bias.Fig 22 India and China have been importing more CPO from Malaysia picking up the slack by other countries52%40%28%16%10% 12%12% 11%7%6%3% 52%40%28%16%10% 12%12% 11%7%6%3% 3%50%40%30%20%10%0%India9MCY