US bank Citigroup has maintained its stand that investors should sell shares of IOI Corp Bhd (1961), Kuala Lumpur Kepong Bhd (KLK) and IJM Plantations Bhd because they are already expensive relative to their forecast earnings.
It also downgraded Sime Darby Bhd to "hold" from "buy", having considered the conglomerate's valuations no longer compelling."An attractive feature of Sime Darby was its dividend yield. But with the recent share price rally, dividend yield is close to only 3 per cent currently," Citigroup said in a research note to investors.
Malaysian plantation stocks are highly valued, thanks to buying from local funds. Foreign shareholdings for Sime Darby and KLK are still below below 15 per cent of total shareholding.
With the rise in palm oil prices over the past two months, price to earnings (PE) of Malaysian plantation counters are now above or at historical averages. The research house expects palm oil prices to stay flat in the near term