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.

'Take-out candidate'

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 day.

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.