RSAWIT (5113) - Rsawit - Frying Palm Cake

Rimbunan Sawit Berhad (Rsawit - 5113) is an integrated plantation player in Sawarak with more than 54,000 hectares of palm oil plantation in Sarawak and palm oil mill in Miri. The palm oil industry had been long suppressed by the weak CPO prices which is due to the excessive supply in the local and international market, as well as weaker demand from importing countries.

However, the recent El Nino weather effect had bring in a wind of changes for the palm oil industry after hotter weather depressed a higher OER in the palm oil.

International Weather Agency had fore warn about the incoming effect of the El Nino 2015-2016 that could be the worst of the century, sending drastic weather changes as well as rain water level that can affect food crops. One of the easiest to get affected will be plantation.

2016 will be the year where most of the plantation stock will start to see turnaround, or a better profit margin. Established plantation player such as Genting Plantation and Kuala Lumpur Kepong  (KLK) had saw their share price gradually appreciated in the recent days.

While the bigger plantation player had started to move steadily amidst the higher CPO prices, it will be much interesting to look at the potential medium size plantation player such as Rsawit.

Should we disregard the panic sell down in March, Rsawit price consolidation will see a crossing of support and resistant line. The crossing point will suggest a new trend to take place, which will be suggesting of a potential uptrend due to the growing CPO prices in the market.

To further back this claim, we will look at the long term out look for CPO.

According to the latest data, the chart had suggested that the current CPO prices had already broken away from the long term downtrend resistant line. In fact, the current break out position is just at the initial stage, which would suggest further potential climb in the CPO.

Putting up the short term outlook, the CPO price had recently broke away from their uptrend trading range, suggesting a steep climb ahead for the CPO. Current FCPO May prices had been testing on the resistant turn support line at RM 2700 range.

Rsawit will be an interesting counter to look out at given it's current share price consolidation and high potential of soaring CPO prices in the coming days. Back in 2014,

Rsawit will be seeing more than 5400 hectares of younger trees starting to bear fruits which will generate good income. Moreover, the completion of the palm oil mill will also be a good income revenue for Rsawit in the coming days.

In short, Rsawit can potentially trade up to RM 0.65, while a longer term outlook will see it potentially reaching RM 0.70 to RM 0.80.

RSAWIT (5113) - Rsawit - Frying Palm Cake
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