Company Name: SAKARI RESOURCES LIMITED
| Research House: OCBC | Price Call: HOLD | Target Price: 1.45 |
OCBC Investment Research downgraded its rating on Singapore-listed Indonesian coal mining firm Sakari Resources to ‘hold’ from ‘buy’, citing lower coal prices.
Shares of Sakari fell 1.38% to S$1.42 and have fallen 22.3% so far this year.
Sakari’s share price has plunged about 32% since it reported first quarter results on April 30, underperforming the Straits Times Index’s 8.6% fall in the same period.
Sakari’s share price drop was partly due to its poor earnings in January-March and a continued fall in coal prices, said OCBC, and lowered its target price on the stock to $1.45 from $2.29.
The broker cut its coal price assumption by 10% to US$76 ($98) per tonne, resulting in a 48% fall in its 2012 earnings forecast for Sakari.
“If coal prices continue to remain depressed or drift lower, this would further jeopardise the company’s targeted average selling price of around US$85-$90 per tonne for this year,” OCBC said.
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