Mandiri Sekuritas raised its rating on plantation stocks to 'neutral' from 'underweight' saying crude palm oil (CPO) has touched bottom and is currently on an upcycle.
"Mandatory use of biodiesel, potential lower-than-expected U.S. soybean production due to dry weather in the Midwest and prolonged rupiah weakness should make domestic CPO price stay strong," Mandiri Sekuritas analyst Hariyanto Wijaya wrote in a note on Thursday.
The research house raised ratings for palm oil producers BW Plantation and Sampoerna Agro to 'neutral' from 'sell', saying their current share prices reflect their estimates of poor full-year financial results.
Mandiri's top picks are Astra Agro Lestari and London Sumatera, as the ratings were upgraded to 'buy' from 'sell', on the back of improvement in their 2014 estimated full-year financial performance.
Plantation stocks were up 3.57 percent, leading the rally in the Jakarta Composite Index, which was up 0.72 percent.
1344 (0644 GMT) (Reporting by Andjarsari Paramaditha; Editing by Sunil Nair)