Forward CPO sales 35% above spot - HOLD

KL Kepong: Forward CPO sales 35% above spot - HOLD - Michael
Greenall

KL Kepong (KLK MK) - HOLD
Price 9.95, TP 10.30, Mkt cap $3,048m, Avg t/o $7.4m

Forward CPO sales 35% above spot

* We rate KLK a HOLD: KLK has managed to sell forward 58% of 2009 CPO production at 35% above current spot price.

* CPO prices have stabilised but retail and manufacturing are vulnerable to a slowdown, particularly in the EU and US.

* Strongest balance sheet and capital management capability. TP of MYR10.30 based on 14x FY09E earnings.

2009E: Rec EPS 0.71, P/E 14.1, P/B 1.6, ROE 12.5, Yld 4.1

2010E: Rec EPS 0.90, P/E 11.1, P/B 1.4, ROE 13.8, Yld 4.1

2011E: Rec EPS 0.92, P/E 10.8, P/B 1.3, ROE 12.7, Yld 4.1