Company Name: GOLDEN AGRI-RESOURCES LTD
| Research House: JP Morgan Chase | Price Call: SELL | Target Price: 0.50 |
J.P. Morgan downgraded palm oil firm Golden Agri-Resources to ‘underweight’ from ‘neutral’ and lowered its target price to S$0.50 from $0.56, on expectations it will be hurt by a muted recovery in crude palm oil (CPO) prices.
By 11:29 a.m., shares of Golden Agri were down 3.1% at $0.62, and have fallen about 4.6% since the start of the year, compared to the Straits Times Index’s 1% rise.
J.P. Morgan said it expects Golden Agri’s fourth-quarter earnings to miss expectations, and forecast a 20% quarter-on-quarter decline in core net profit to US$69 million ($84.5 million) as average CPO prices fell 23% in the period.
It also cut its 2013 and 2014 earnings per share estimates by 10% to factor in lower CPO prices.
Indonesian plantation companies, including Golden Agri, are expected to see meaningful labor cost increase following this year’s rise in minimum wage, the brokerage said.
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