Takeovers of London-listed palm oil producers look more likely after a marked underperformance of their shares compared with those of South East Asian peers, VSA Capital said.
A 15% rise in palm oil prices from late August to late October has, in lifting the profitability outlook for producers of the vegetable oil, spurred a revival in their shares in most markets.
In Indonesia, the top palm oil-producing country, locally-listed shares in producers rose by an average of 27% over the period.
In second-ranked Malaysia, shares in palm oil producers were up 21%, with peers listed in Singapore seeing a 21% gain.
"We have seen share prices increase for almost all listed palm oil producers, which is unsurprising given most stocks have a strong correlation with crude palm oil pricing," London-based VSA Capital said.
However, in London, where palm oil groups such as Anglo-Eastern Plantations, MP Evans and REA Holdings have their primary listings, shares fell by 5.9% over the same period.
"London is underperforming every other exchange with more than one palm oil producer listed on it, except Colombo, Sri Lanka," VSA said.
The "widening valuation gap" between South East Asian and London-listed producers "increases the likelihood" of South East Asian groups viewing London-traded peers as takeover targets.
On a basis of the ratio of enterprise value to mature hectares of palm plantation, a common valuation metric in the industry, Indonesian producers are trading at a premium of more than 30% to London-listed peers, and Malaysian group at a premium of more than 50%.
The broker viewed REA Holdings as "the most likely" of the London-listed groups to unveil a deal with a South East Asian peer, with the company already saying it is in talks with a trade investor.
The announcement comes as REA is developing long-standing plans to list in Jakarta, in part to exploit the higher valuations available in the country.
Sector minnow DekelOil, meanwhile, has highlighted its lack of a South East Asian investor, at a time when it requires significant funds to develop sites in West Africa.
However, VSA flagged MP Evans as its top pick among the London-listed palm groups, given the prospect of a windfall from the sale of a 34% stake in Australian cattle business NAPco.