Friday, November 22, 2013

Golden Agri-Resources: Recent run-up likely overdone (OCBC)

Golden Agri-Resources:
Fair value S$0.50
add: 12m dividend forecast S$0.010
versus: Current price S$0.595
Recent run-up likely overdone

Despite a disappointing set of 3Q13 results, Golden Agri-Resources’ (GAR) share price has continued to do well, likely buoyed by more signs that CPO (crude palm oil) prices are stabilizing around current levels (MYR2500/ton), aided by slightly better demand and supply factors. Note that our US$830/ton (MYR2650/ton) forecast has already taken these factors into consideration. But further CPO price upside may still be capped by the expected jump in global oilseed production. And as the market appears to be taking on a more “risk on” approach, we apply a higher 13.5x peg (versus 12.5x previously) to our FY14F EPS, thus raising our fair value from S$0.465 to S$0.50. But given the potential downside risk, we maintain our SELL rating.


CPO prices showing more signs of stabilizing
Despite a disappointing set of 3Q13 results, Golden Agri-Resources’ (GAR) share price has continued to do well, likely buoyed by more signs that CPO (crude palm oil) prices are stabilizing around current levels (MYR2500/ton); this as on by increasing expectations of a likely lower CPO supply coming out from both Malaysia and Indonesia this year. Indeed, GAR expects its CPO production to decline some 5% this year, as opposed to its earlier 5-10% growth guidance. We believe that the recent announcement by the Indonesian government to double the mandatory bio-diesel blending to 10% from next year is also supportive of CPO prices. As such, some industry experts are expecting CPO to hit MYR2700/ton early next year, or up about 5% from here.

Likely cap on CPO price
In any case, our CPO price assumption for 2014 of US$830/ton (MYR2650/ton) has already taken into account these factors. In addition, we believe that further CPO price upside may still be capped by the expected jump in global oilseed production. In its latest forecast, the USDA is projecting for production to hit a record 499.4m tons for 2013/2014, up 4.3m tons from Sep, with higher soybean, sunflower-seed and rapeseed accounting for most of the rise. GAR is also expecting its CPO production to revert back to the usual 5-10% growth next year. In addition, we note that there could be further increases (albeit at a slower pace) in cash cost of production, driven by rising labour costs.

Valuations still look pricey
As the market appears to be taking on a more “risk on” approach, hence warranting a higher 13.5x peg (versus 12.5x previously) to our FY14F EPS, our fair value improves from S$0.465 to S$0.50. But given the potential downside risk, we maintain our SELL rating.


Source/Extract/Excerpts/来源/转贴/摘录: OCBC-Research,
Publish date: 20/11/13

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