Golden Agri

CPO/Golden Agri: CLSA notes that CPO price likely to stay depressed below RM3,000/t average for FY13, due to the high stock levels and weakness in demand despite the festival season. Record soybean crop expected in Americas are a key concern, as the spread between CPO and soyoil will likely close due to prices of soyoil coming down. CLSA reduce FY13 CPO forecast from RM3,000/t to RM2,600/t, and expect a recovery to RM2,800/t in FY14 once the excess inventory is run down. CLSA maintains a BUY on Golden Agri despite the negative sector outlook, with a TP of $0.78. House is positive due to the potential upside from its trading team as well as M&A options from the money it has raised.