Company Name: GOLDEN AGRI-RESOURCES LTD
| Research House: Nomura | Price Call: BUY | Target Price: 0.96 |
Nomura Research in a Nov 11 research report says: "Earnings increased 99% y-o-y, on the back of revenue doubling y-o-y and adjusted net profit margins remaining flat.
"Revenue growth was driven by a 24% increase in palm product volumes (a function of higher yields and hectarage) and substantial average selling price (ASP) growth (average CPO price up 41% y-o-y).
"The slightly lower operating margins however imply that ASP increase has not outpaced growth in cost per ton (inflated by the rupiah's 5% strengthening y-o-y). Lower interest expense (as a % of revenue) helped adjusted net margins to remain flat.
"We value the company at 16x P/E to FY11F EPS of US$0.05. We believe this mid-cycle valuation of +0.8x SD above the stock's mean is reasonable in the context of our bullish CPO view. Our target price is 96 cents. MAINTAIN BUY."
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