We are not entirely surprised by the high ratio of 58% of planters that missed consensus expectations in the latest results season as the market has been overshooting on CPO price estimates and underestimating the impact of the rising operating costs. Investors should brace for one of the sharpest quarterly earnings declines in the plantation sector in the next results season, pulled down by weaker CPO price, high operating costs and seasonally lower production. We observed three key trends from our recent meetings (1) Plantation companies are more bearish on CPO prices than in the previous quarter. (2) Most are contemplating reducing fertiliser usage. (3) They are looking to conserve cash and will give priority to ongoing estate developments and facilities when it comes to capex. Th e sector remains an UNDERWEIGHT in view of the weak CPO price prospects and cost pressures which inevitably mean earnings downgrades by the market. Wilmar remains our top pick.