Global Palm Resources

Global Palm Resources: OCBC is not sanguine about the company after it slashed its planting target by >60% to 300-400 ha for 2012 as it now faces increasing difficulties in its negotiation with the local population. Instead, management is exploring various opportunities for acquisitions to boost its plantation size; and believes that the process to be easier now with the drop in CPO prices. Nevertheless, house notes that rising inventory levels could remain an issue which could see stockpiles rising further in 4Q12 and even 1Q13 due to continued strong CPO production and muted demand. Unless there is a sharp recovery in CPO prices or a sizable brown-field acquisition, OCBC does not see any catalyst in sight. Keeps Hold recommendation with an unchanged fair value of $0.19 even based on 10x FY13 earnings.