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Both schemes have been categorized as " share-farming " interest scheme by Securities Commission of Malaysia, yet, both were in the limelight lately due to their contradict directions. The old one ( Country Heights Growers Scheme ) is wooing investors to terminate it, while the new one ( Golden Agro Growers Scheme ) is wooing investors to invest. Why CHGS was in HOT water? CHGS was the 1st oil palm plantation investment scheme in Malaysia. Launched in 2007, it guaranteed a 8% return annually for first 3 years, and subsequently it is projected to distribute the returns of over 11% per year throughout a period of 20 years. However, voluntary early termination of the scheme was proposed recently, citing that CHGS was unable to reach its full potential because of poor fresh fruit bunches (FFB) yield. Various factors were given such as unpredictable weather conditions, incursions of wild elephants into the estate, poor soil fertility, shortage of key personnel and manual workers,...

While CPO prices have declined 20% over the past one-month to M$2,300/t, share prices of our upstream plantation universe have not reacted materially moving by -8% to +3% (-3% to +3% for our top picks) Key question hence is whether this raises the risk of a further sell-off in plantation stocks or will CPO prices recover? Key reasons for the CPO price fall: 1) High inventory levels amid the current high output season. 2) Some easing in demand (though not materially) mainly from slower bio-diesel production. 3) Softening crude oil prices. 4) Better soybean supply prospects with improved weather. Will CPO prices weaken further? CPO’s price competitiveness to soy-oil and crude oil is now at its best since the previous economic crisis in late-2008. CPO's price discount is currently at US$340/t to soy-oil (spot) versus its historical mean discount of US$160/t. CPO at current spot levels of M$2,300/t is also already discounting crude oil pri...