Stock Name: GoldenAgr
Company Name: GOLDEN AGRI-RESOURCES LTD
Research House: UOB KayHian
Company Name: GOLDEN AGRI-RESOURCES LTD
Research House: UOB KayHian
UOB KayHian upgrades Golden Agri-Resources (E5H.SG) to Hold from Sell, citing recent share price weakness; it tweaks its target to $0.73 from $0.75 based on 16X 2012F P/E upcycle sector valuation.
It says FY10 core net profit, +91% on to US$387 million ($491.8 million), was above its expectation, mainly on a 36% rise in CPO FOB prices offsetting a 3% fall in CPO production, margin improvement, and forex gain.
The house expects earnings growth to moderate in 2011, as it tips CPO production to increase about 10%, in line with management's guidance, “however...we expect to see higher production cost, such as fertiliser prices in 2011, which is in line with higher crude oil prices, moderate growth in CPO prices in 2011 and higher CPO export tax.”
It says FY10 core net profit, +91% on to US$387 million ($491.8 million), was above its expectation, mainly on a 36% rise in CPO FOB prices offsetting a 3% fall in CPO production, margin improvement, and forex gain.
The house expects earnings growth to moderate in 2011, as it tips CPO production to increase about 10%, in line with management's guidance, “however...we expect to see higher production cost, such as fertiliser prices in 2011, which is in line with higher crude oil prices, moderate growth in CPO prices in 2011 and higher CPO export tax.”
The house tips 2011 and 2012 net profits of US$400.6 million and US$426.7 million respectively. Recommends an entry price of $0.60.
Shares +5.4% at $0.685.
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