Panmure Gordon has named agriculture groups Asian
Plantations, which it cited as a potential takeover target, and Zambeef among its
top stock picks for 2013.
The broker forecast that 2013 would be a "year of change"
for Asian Plantations, as the palm oil group sees the four estates it has
developed in Malaysia begin producing the vegetable oil in earnest.
"We expect the company's mill to process about 200,000
tonnes of fresh [palm] fruit bunches, meaning revenues should leap 10-fold,"
the broker said.
"While yields on its estimates obviously will take time to
build, the character of the business is changing significantly," Panmure analyst
Graham Jones said.
Indeed, the group "could become a take-out candidate" now
that it had developed productive plantations.
"With most of the 'heavy lifting' complete on the development
of a mid-sized palm company, we think Asian Plantations could generate interest
from Malaysian pension funds, larger industry players or new entrants to the
palm industry," Mr Jones said.
"We see substantial upside in the shares," he added,
restating a "buy" recommendation on the stock and a price target of 380p, well
above the 230p at which the shares were trading on Friday, unchanged on the
Panmure said its price target equated to a value of $22,000
per plantable hectare of plantation, compared with an average of about $26,000
per hectare for Malaysian peers.
Profits to double?
The broker also restated a "buy" rating on shares in Zambeef,
the Zambia-based soyoil-to-butchers shops group, highlighting the increasing
demand for meat in the fast-growing African country.
With the International Monetary Fund forecasting a 9% rise
in economic output per capita in Zambia this year, "this income growth should ensure
that strong consumer demand for Zambeef's products continues, and in particular
for key sources of protein such as beef, pork and chicken", Panmure said.
"Zambeef's strong position in Zambian agribusiness, its high
degree of vertical integration and the strong fundamental growth drivers of the
Zambian consumer market underpin our forecasts for adjusted earnings per share
to more than double between 2012 and 2015."
The broker placed a target of 53p on the shares, which were
trading at 40.5p on Friday, up 2.5% on the day.
The recommendations came among a list of 13 companies which Panmure
rated as its top picks for 2013 among small and mip-cap groups listed in London.
Other recommendations included chocolate maker Thorntons,
publisher Johnston Press and healthcare group CareTech.