KUALA LUMPUR (Sept 12): CIMB Investment Bank Bhd said Sime Darby Bhd is CIMB's preferred pick in Malaysia's plantation sector, as Sime Darby's share price may be rerated on higher commodity prices. CIMB also took into account, Sime Darby's plan to list its plantation and property units.

CIMB analyst Ivy Ng Lee Fang wrote in a note today that the research firm expects an average crude palm oil (CPO) price at RM2,600 a tonne this year.

"Our preferred pick in Malaysia as we expect its share price to rerate on the back of higher commodity prices and on its plans to demerge and list its plantation and property divisions," Ng said.

Ng said CIMB has a target price (TP) of RM10 for Sime Darby shares with an "add" call. At 10:23am, Sime Darby shares were traded at RM9.13, for a market value of RM62.16 billion.

Hong Leong Investment Bank Bhd analyst Chye Wen Fei said its top plantation sector picks are Sime Darby and United Malacca Bhd. Chye said Hong Leong has TPs of RM9.96 and RM7.11 for Sime Darby and United Malacca shares respectively, with "buy" calls for both stocks.

CIMB and Hong Leong's notes followed the Malaysian Palm Oil Board's (MPOB) announcement yesterday on the sector's production and inventory numbers for August 2017.

August palm oil stockpile rose 8.79% to 1.94 million tonnes, from 1.79 million tonnes in July, according to MPOB.