Company Name: GOLDEN AGRI-RESOURCES LTD
Research House: OCBC
OCBC upgrades Golden Agri-Resources (E5H.SG) to Buy from Hold as house raises its fair value estimate to $0.91 from $0.78, which now provides upside of over 10%.
Says Golden Agri “is likely to see further boost from the continued run-up in CPO prices over the next six months, underpinned by supply-side issues” brought on by weather conditions in Indonesia. House again revises its CPO base assumption, in view of the current supply issues, to US$950/tonne from US$900/tonne.
“This as we expect to see prices edging up even more in early 2011 before dropping off after mid-June 2011.”
OCBC increases its FY11 revenue and core earnings estimates by 5.0% and 9.1% respectively as a result of the CPO price revision, also raises its valuation to 17x FY11E EPS from 16x.
Shares +1.9% at $0.79.
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