Kencana Agri rated 'sell' by UOB KayHian

Stock Name: KencanaAgri
Company Name: KENCANA AGRI LIMITED

Research House: UOB KayHian

Price Call: SELL

Target Price: 0.37

UOB KayHian Research in a March 14 research report says: "We believe Kencana Agri (KAGR) will not repeat its weak performance in 2011 (net profit of US$6.2 million, -41.0% y-o-y).

"KAGR's 2011 results were affected by high production cost as more oil palm reaches maturity stage but the income generated was not enough to offset the high costs. It will take time for KAGR to perform due to its young oil palm age profile.

"As at Dec 11, KAGR has only planted about 42,714ha (about 26.5% of its total landbank). It still has about 73.5% of landbank for new planting.

'We forecast EPS of 2.0 US cents, 2.7 US cents and 3.0 US cents for 2012, 2013 and 2014 respectively. Target price of 37 cents, based on 11x 2013F PE, as young plantation companies tend to have volatile earnings. MAINTAIN SELL."

KencanaAgri - CPO prices to stay firm; UOB likes mid cap plays

Stock Name: KencanaAgri
Company Name: KENCANA AGRI LIMITED
Research House: UOB KayHian

UOB KayHian says firm CPO prices are likely to stay until mid-2011 as the peak production cycle is likely to be delayed to June/July vs earlier expectations of March/April.



The house says this is due to a lack of moisture after less-than-normal monsoon rainfall, while oil palm trees look stressed. It expects 2011 new add from Malaysia of 600,000-700,000 tons vs 800,000 tons earlier.

“This is new development that we think the CPO market has yet to factor in” and which could support CPO prices above MYR3300/ton to end-2Q11. 

Despite bullish CPO prices, it says plantation stocks are underperforming “as this sector is very well owned by investors.” 

Still, the house likes mid-cap names, including First Resources (EB5.SG), rated Buy with a $1.86 target and Kencana Agri (F9M.SG), Buy with a $0.53 target. Shares are +0.7% at $1.44 and +1.1% atS$0.445 respectively. Sell-rated Golden Agri (E5H.SG) is off 0.7% at $0.725 while Hold-rated Indofod Agri (5JS.SG) is flat at $2.60. 

KencanaAgri - Kencana Agri cuts to Fully Valued by DBS Vickers

Stock Name: KencanaAgri
Company Name: KENCANA AGRI LIMITED
Research House: DBS Vickers

DBS Vickers downgrades Kencana Agri (F9M.SG) to Fully-Valued from Hold as stock has breached $0.35 target price, according to Dow Jones.



DBS Vickers says investors have more than priced-in plantation group’s 3-year volume CAGR of 25%, potential spike in next year’s earnings.



Notes stock trades at all-time high P/E of 19.6x 2011 earnings, driven by bigger peer Wilmar’s (F34.SG) recent move to take 20% stake in company for $80 million.



Shares down 2.4% at $0.405.

KencanaAgri - Kencana cut to Hold by DBS; $0.35 target

Stock Name: KencanaAgri
Company Name: KENCANA AGRI LIMITED
Research House: DBS Vickers

DBS Vickers downgrades Kencana Agri (F9M.SG) to Hold from Buy, cuts target price to $0.35 from $0.39 after revising down earnings forecast as house thinks placement of shares to Wilmar unlikely to manifest in Kencana’s medium-term profitability, says Dow Jones.



“We cut FY10F and FY11F revenue forecasts by 26.5% and 4.3%, resulting in earnings revisions of 43.2% and 10.2%, respectively,” DBS says; 2Q net profit of US$1.248 million ($1.7 million) was significantly below broker’s expectations.



Kencana said late Friday Wilmar will buy 20% stake in the company for $80.4 million. Stock last down 2.5% at $0.385.