TWSPLNT stock code 6327 Tradewinds Plantation Berhad (TWSPLNT) is an investment holding company. The company, through its subsidiaries, cultivates oil palm, rubber, and animal husbandry, processes palm oil and kernel, and provides landscaping consultancy, design, and contract works. 
TWSPLNT reached a significant major Wave 4 low at RM2.65 on 8 August 2011 with grossly oversold and bearish chart signals. Due to all its positive indicators, it is likely to surge to its obvious upside Wave 5 targets (of RM4.68 and RM5.42) and resistance levels above. ACCUMULATE (TECHNICAL) on dips for TWSPLNT, with stop-loss at RM3.49.
The daily, weekly and monthly indicators (like the CCI, DMI, MACD, Stochastic and Oscillator) are firmly positive and now depict the fine indications of TWSPLNT’s prolonged price strength. We expect TWSPLNT to remain very firm on any weakness to its support levels of RM3.51 and RM4.17. Our technical upside targets for TWSPLNT are RM4.68 and RM5.42. Stop-loss is at RM3.49.
Looking at the different sectors, we noted that the plantation sector had been resilient despite the recent global and macro-economic woes. What is more interesting is that the share price of smaller-capitalized plantation players had performed nicely. With the CPO 3-month futures prices hovering around the RM3,000-level, we feel that investor sentiment for the plantation sector will remain optimistic for the short-term. Of the smaller-caps stocks, we continue to like TWSPLNT Berhad (TWSPLNT) for its strong price momentum.
On the fundamental aspect of TWSPLNT, we refer to their 3Q results announcement. The group recorded an increase in revenue of 39.6% YoY from RM238.8m to RM333.5m and correspondingly saw a rise of 96% YoY (from RM50.3m to RM98.8m) in their quarterly net profit numbers as well. TWSPLNT attributed the increase to firmer CPO prices traded and also a rise in the production of palm products.
Maybank IB does not have coverage on TWSPLNT. Consensus data according to Bloomberg reveals that only 2 research houses have coverage on TWSPLNT and both houses have a Buy or Outperform call, on the stock with an average consensus target prices of RM4.13. Consensus estimates TWSPLNT to trade at a PER of 7.7x for FYE2012 and 7.0x for FYE2013. The indicated dividend yield for the stock is around 2.42%.
by Maybank Investment Bank
