The following are excerpts from the latest analyst reports:
DBS Vickers: Buy China Fishery, target price $1.39
The Group continues to deliver growth in current downturn, where many others are showing negative growth. This, in our view, is due to the continued demand for staple food products and prices. Maintain Buy, Target Price: S$1.39. We retain our Buy recommendation.
Our TP is premised on 8x on FY09F earnings, a discount to regional/global fishing peers. Our TP equates to an upside of c. 47% to current price. Maintain Buy. Risks to our view are (i) Substantial changes to fishing quota; (ii) change in regulation resulting in loss of fishing licenses; (ii) major changes in weather patterns, resulting in huge fall in harvest quantity, not made up for by price increases.
UBS maintains ‘sell’ on Golden Agri despite yield turning positive
The worst may be over for Golden Agri’s (GAGR) production, which first started deteriorating significantly in Q408. To recap, GAGR’s FFB production declined by 24% YoY in Q408 and 15% YoY in Q109. Although GAGR explained that the contraction was due to weather issues and tree stress, GAGR’s production trends underperformed the sector during this period.
After a troubled Q109, yields and production appear to be improving. Yield started turning positive YoY in April. Valuation: price target of S$0.30 Our price target is based on a sum-of-the-parts valuation where the plantations division is valued on a DCF assuming long-term CPO price of US$570/tonne, a WACC of 14%, and long-term growth of 5%.
