Golden Agri: UOB KayHian upgrades grp to Hold from Sell, citing recent share price weakness; tweaks its target to $0.73 from $0.75 based on 16X 2012F P/E upcycle sector valuation. Add that FY10 core net profit, +91% on to US$387m, was above its expectation, mainly on a 36% rise in CPO FOB prices offsetting a 3% fall in CPO production, margin improvement, and forex gain….
House expects earnings growth to moderate in 2011, as it tips CPO production to increase about 10%, in line with management's guidance, however expect to see higher production cost, such as fertiliser prices in 2011, which is in line with higher crude oil prices, moderate growth in CPO prices in 2011 and higher CPO export tax. House tips 2011 and 2012 net profits of US$400.6m and US$426.7m respectively. Recommends an entry price of $0.60.
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