The house says the stock offers a 75% potential upside and new target price implies FY2011 price earnings of 15.5X. “Rubber is the new black” and that GMG is the “world’s pure rubber play,” the house says.
Bank of America-Merrill Lynch raises Genting Singapore (G13.SG) target price to $1.40 from $1.22 after increasing EBITDA estimates for FY10 by 13%, for FY11 by 12% to account for sustainable strong performance of slot machines at Resorts World Sentosa, says Dow Jones.
Bank of America-Merrill Lynch has started Golden Agri-Resources (E5H.SG) at Buy with $0.72 target price, based on 14x FY10-11 P/E, says Dow Jones.
BoA-Merrill Lynch says palm oil producer has largest planted area in Indonesia, is one of cheapest, most liquid CPO proxies. Tips every 1% rise in CPO price to boost earnings by 2%. Expects CPO price to pick up in 4Q10 due to strong soybean demand in South America’s biodiesel industry, less-than-expected supply.
Research house says existing yet-to-be-planted land bank, coupled with new planting rate of 30,000-50,000 ha yearly, will guarantee group’s mature land bank growth for next decade; “as agricultural land availability diminishes, Golden Agri’s huge agriland holdings will also prove to be very valuable in the future.”
Shares –0.9% at $0.53.
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Recent strength in shares of plantation companies offers good chance for investors to reduce exposure to palm oil sector as unpredictable weather patterns have complicated farming practices, predictability of CPO prices, says Bank of America-Merrill Lynch, according to Dow Jones Newswires.
“Weather outlook uncertainty increases the investment risk substantially.” Notes current bullish views over palm oil sector based partly on poor output due to El Nino, re-emergence of hot money.
