KUALA LUMPUR: OSK Research says despite the recent selldown, it thinks IOI Corp is still pricey at 20 times forward earnings, which is at the top end of the PE range in a post-bubble environment.

This is despite IOI Corp being the world’s most profitable planter, generating US$2,255 per
mature hectare. It had a sell on IOI at RM5.20.

"For exposure to integrated planters, we prefer Singapore-listed Wilmar International (Neutral TP   S$7), which is larger and yet cheaper than IOI," it said.

OSK Research said investors betting on a rebound in palm oil price should buy an inexpensively valued, upstream heavy player such as Golden Agri (Trading Buy, TP 63.5 Singapore cents), the stock
price of which tends to react better to an upswing in palm oil price.

It said IOI’s annualised 1H core earnings were in line with its full year forecast of RM1620.6 million but were 8.6% below consensus forecast of RM1773.1 million. Its core number was arrived at by removing the forex translation gain of RM129.5 million.