We continue to like KFIMA on its sound fundamental and cheap valuation. K Fima is a good proxy to the Plantation sector that will benefit from high CPO prices, which will benefit its plantation and bulking divisions (accounted for about 30% of its revenue). In addition, the group will enjoy stable growth after diversifying its base into manufacturing (which contributes more than 40% of its total revenue). After the recent upgrade in CPO target prices of RM3200/MT and RM3000/MT for 2011 and 2012, we have projected forward EPS of 26.6sen and 29.3 sen for FY2011 and FY2012 respectively. Pegging valuations at an average PE of 7x, our derived fair value for KFIMA is RM2.05.
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