2Q12 results largely disappointed. In our plantation sector report of 11 July (post MPOB's 2Q industry output data release), we warned that the sector's 2Q results may continue to disappoint (after a dismal 1Q), and so it has turned out. The sector was hit by low FFB output, high production cost, and flattish QoQ CPO ASP. Despite the 2Q12 set-backs, we expect 2H12 earnings to be significantly stronger HoH as plantation companies enter the peak harvesting season. We maintain our Neutral sector call on fair valuations. We have however upgraded SIME to a BUY post its results outperformance and for its relatively cheaper valuation vis-�-vis IOI and KLK. SOP is our other top BUY.

Our malaysia market always different from global 1