Cimb downgrades IndoAgri to Underperform from Trading Buy on concerns European debt crisis may take toll on CPO prices as the potential contagion could lead to slower growth in the European economies and hamper the governments' push to meet the EU’s biodiesel mandate. This would be a big blow to biodiesel demand as the EU is the largest supporter of biodiesel, consuming 50% of global biodiesel production.
Cuts target price to $2.25 from $2.86 after lowering FY10-12 earnings estimates to assume lower CPO selling prices in Indonesia and reduced earnings contributions from London Sumatra. Shares holding up at $2.13 but face resistance at $2.18 with stochastics entering overbought territory.
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