A downwards drift at Malaysian palm oil play Asian Plantations (PALM:AIM) offers an opportunity for value hunters. Next month’s interims, for which a date is yet to be confirmed, should highlight growing third-party fresh fruit bunch (FFB) processing volumes, while additional upside catalysts include a crude palm oil (CPO) price recovery and the outside possibility of a bid.

The Singapore-based firm has acquired strategically-attractive palm oil development land in Malaysia, where forest zoning means suitable titled agricultural land is increasingly scarce. Following the delayed completion (21 Aug) of its ‘Grand Performance’ estate acquisition, the £101 million cap now has 24,622 hectares (60,840 acres) of land, of which it believes over 21,000 hectares can be planted, admittedly a downgrade from earlier expectations.

Yet Asian is making positive strides, with 18,000 hectares set to be planted in 2013 and all land likely to be planted by the end of 2014. Its state-of-the-art mill is seeing growing volumes of third party FFB, which is crushed into crude palm oil then refined into everything from cooking oil to shampoo. Small estates want to sell their FFB to the firm’s efficient mill and this welcome trend should boost revenues.

Palm oil prices are presently depressed, yet long-term fundamentals for the world’s most-consumed vegetable oil remain compelling. Vegetable oil supplies are tight, demand from developing markets is burgeoning and a growing global population is heightening food security concerns. Shares believes Asian’s strategically-attractive assets could eventually draw a bid from a larger player, possibly as planting nears completion next year.

Shares says: Asian Plantations is interesting at 215p.