Analysts issue calls on Petronas, Wesfarmers, and Westgold
Palm oil prices rose Thursday, with the Bursa Malaysia Derivatives contract for October delivery climbing 87 ringgit to 4,709 ringgit a ton, as crude oil and soybean oil prices surged amid increasing tensions in the Middle East. The U.S. is increasing the presence of forces, medics and weaponry in the region to give President Trump more military options as he considers expanding the conflict against Iran, according to a Wall Street Journal report cited in the roundup. David Ng, a trader at Kuala Lumpur-based Iceberg X, said prices for palm oil are well supported above 4,600 ringgit a ton, with resistance at 4,780 ringgit a ton.
CIMB Securities maintained a hold rating on Petronas Chemicals and a target price of 5.45 ringgit, with shares ending 1.7% higher at 4.80 ringgit. Analyst Muhammad Afif Bin Zulkaplly said the company is expected to post sequentially stronger second-quarter earnings, driven mainly by its fertilizer and methanol segment, as higher product prices supported by Middle East supply disruptions and stronger fertilizer demand lift results. However, he said that earnings could ease in the third quarter as product prices normalize with improving supply and easing geopolitical risk premiums, though prices remain above pre-conflict levels. Zulkaplly said he could turn more bullish if petrochemical spreads improve structurally or if the disposal of unit Pengerang Petrochemical Company removes an earnings drag.
Gold was steady in early Asian trade at $4,133.08 an ounce, but Tony Sage of Critical Metals said the broader outlook for the metal remains bearish in the near term due to elevated bond yields across major economies. Rising oil prices amid increasing Middle East tensions have fueled concerns over global inflationary pressures and reinforced hawkish monetary policy expectations, which typically drag down non-interest-yielding assets like gold, Sage said. Gold prices are at risk ahead of central bank decisions, with the European Central Bank’s rate decision this week, and the Federal Reserve, Bank of Japan and Bank of England next week.
Jefferies rates Wesfarmers a hold with a A$73.00 per share price target. The company’s stock ended Wednesday at A$89.90. While the expansion of its Mt Holland lithium project was not in doubt, analyst Michael Simotas said the full benefits from doubling capacity of the mine and concentrator remain to be seen. “With significant uncertainty and volatility in lithium prices, it is unclear whether Wesfarmers will generate an acceptable return on its circa A$3 billion total project investment,” Simotas said. Jefferies noted the hydroxide refinery is not yet proven but that the expansion plan carries less operating risk given it will not expand refinery capacity and the first concentrator has been successful.
Macquarie said Westgold Resources could positively surprise with its final dividend for the 2026 fiscal year, forecasting A$0.09 per share, which is 12.5% above the Visible Alpha consensus of A$0.08. Westgold ended Wednesday at A$4.85. The company had cash, bullion and investments of A$939 million at the end of June, which Macquarie described as a strong balance sheet position. Westgold did not pay an interim dividend as it had only recently started paying tax and wanted to pay a franked dividend, the investment bank said. Macquarie retains an outperform rating on the stock.