8 August 2008
UNDERPERFORM , Downgraded(cimb)
RM5.95
Target: RM5.80
Mkt.Cap: RM4,500m/US$1,373m
Dry spell..........................oil price of US$120 per barrel.
foreword(序言) is repeated please click here if you want to read
Valuation and recommendation
Maintain earnings forecasts but downgrade target price to RM5.80. There is no change to our earnings forecasts for Asiatic as our CPO price projections are intact. However, we have lowered our target forward P/E rating from 14x to 10x in view of the downside risk to CPO price if oilseed crop prospects continue to improve. Our new target P/E is aligned to the stock’s historical 3-year average 12-month forward P/E. As such, our target price for Asiatic has been lowered by 28% from RM8.10 to RM5.80.
Downgrade to UNDERPERFORM. In line with the target price downgrade, we are cutting our rating for Asiatic from Neutral to UNDERPERFORM. The group’s earnings are sensitive to changes in CPO price as it is a pure planter and sell all its crops on spot basis. Key de-rating catalysts are the softening CPO price, lower crude oil price and higher operating costs.
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