While most analysts dismiss the recent mega plantation merger as less than good, and that they believe plantations would be best left in manageable size rather than mega sized. However, they proved that they do not hold their words by buying strongly into the soon-to-be-merged entities. They average gain of more than 5% in yesterday’s trade and continue to trade strongly today.
There are a few facts to note. The agricultural industry is being pumped generously by the current government and will continue to do so to provide diversity to Malaysia’s economy. The future of biodiesel fuel is reasonably certain as Malaysia will continue to spearhead to be one of the leading biodiesel fuel hub in the world. I must remind all that this mega investment of biodiesel is not done by the government but private funding of businessmen who are bullish about this industry. Malaysia had tied up with China, Japan and Europe for this particular sector.
Fact that this mega group will control Malaysia and Indonesia’s plantation segment is something which will do good for the whole economy in the long run. The synergy is properly managed will result in reduction in costing and hence competitiveness of the product.
I believe a buy would be proper and to hold until mid January where the traditionally annually weak market sentiment will kick in.
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