Thursday, September 19, 2013

Golden Agri-: Downside risk remains (OCBC)

Golden Agri-Resources:
Fair value S$0.465
add: 12m dividend forecast S$0.010
versus: Current price S$0.54

Downside risk remains
• Weak CPO outlook
• Recent rebound is premature
• Downside risk remains

Golden Agri-Resources (GAR), being one of the largest palm oil plantation owners in the world, is likely to feel the negative impact of further pullback in CPO (crude palm oil) prices, especially after the recent rebounds in prices of CPO and GAR shares. With demand from both China and India – two of the world’s largest import markets for CPO – likely to remain soft, we believe that the worst is not over yet for the upstream players. Hence we maintain our SELL rating and S$0.465 fair value (still based on 11x blended FY13/FY14F EPS).


CPO outlook remains weak
The outlook for CPO (crude palm oil) prices is likely to remain weak as market watchers continue to expect further weakness in 2H13, weighed by expectations of higher CPO production and also increased supply from vegetable substitutes like soy and corn oils. According to Dorab Mistry, director at Godrej International Ltd, “the rally in CPO prices has just about run its course and will face downward pressure from here”. Mistry now expects to see new lows in vegetable oil and particularly in palm and lauric oil in early Jan .

Upstream players to feel negative impact most
Golden Agri-Resources (GAR), being one of the largest palm oil plantation owners in the world, is likely to feel the negative impact the most. Over the past three years, GAR share price has shown a strong 0.8 correlation to CPO prices. And in wake of the recent rebound in CPO prices and the corresponding rebound in GAR share price, we suspect that any pullback could come quite swiftly. Nevertheless, management continues to remain upbeat about the long-term prospects of the palm oil industry, and will continue to increase its production of sustainable palm oil, improve operating efficiency and also optimise its downstream value chain opportunities.

Maintain SELL with S$0.465 fair value
But in the short term, the prospects for GAR remain more negative. We also note that import of vegetable oils into India has fallen by nearly 17% MoM in Aug, led by crude soy oil (down 46%) and RBD palm olein (down 33%). We note that Fitch has recently warned that CPO plantation companies in Asia could face slower demand from both China and India – two of its largest import markets . As such, we do not believe that the worst is over yet and hence we maintain our SELL rating and S$0.465 fair value (still based on 11x blended FY13/FY14F EPS).


Source/Extract/Excerpts/来源/转贴/摘录: OCBC-Research,
Publish date: 18/09/13

No comments:

Post a Comment

Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
投资只需学好两门课: 一,是如何给企业估值,二,是如何看待股市波动
吉姆·罗杰斯(Jim Rogers)
“错过时机”胜于“搞错对象”:不会全军覆没!”
做自己熟悉的事,等到发现大好机会才投钱下去

乔治·索罗斯(George Soros)

“犯错误并没有什么好羞耻的,只有知错不改才是耻辱。”

如果操作过量,即使对市场判断正确,仍会一败涂地。

李驰(中国巴菲特)
高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

Tan Teng Boo


There’s no such thing as defensive stocks.Every stock can be defensive depending on what price you pay for it and what value you get,
冷眼(冯时能)投资概念
“买股票就是买公司的股份,买股份就是与陌生人合股做生意”。
合股做生意,则公司股份的业绩高于一切,而股票的价值决定于盈利。
价值是本,价格是末,故公司比股市重要百倍。
曹仁超-香港股神/港股明灯
1.有智慧,不如趁势
2.止损不止盈
成功者所以成功,是因为不怕失败!失败者所以失败,是失败后不再尝试!
曾淵滄-散户明灯
每逢灾难就是机会,而是在灾难发生时贱价买股票,然后放在一边,耐性地等灾难结束
  • Selected Indexes 52 week range

  • Margin of Safety

    Investment Clock

    World's First Interactive Investment Clock