Golden Agri

Golden Agri: Nomura downgraded Golden Agri Resources (GGR) to NEUTRAL, with TP of $0.65; House revised their valuation methodology to intrinsic DCF, cut its earnings forecasts due to lower CPO prices in 2013 and the expectation that GGR’s China’s operations will continue to be a drag on profitability. With CPO at MYR2,100/mt, Nomura estimate GGR’s mature business offers an underlying FCFE yield of only 3%. On the sector, Nomura has also made changes to their valuation methods due to non-accurate prediction of its supply/ demand model; new valuation method led to lower TPs. House estimate an average CPO price of Myr2,600/mt in 2013, ~13% up from current levels but 7% below the historical average in the biodiesel-era. Among the SG-listed cos, Nomura top picks are First Resources (BUY with TP of $2.90); Bumitama (BUY with TP of $1.50);