by winston » Wed Jan 26, 2011 1:14 pm
Not vested. From OCBC:-
Global Palm: Initiate with HOLD for long-term growth
Summary: Global Palm Resources Holdings Limited (Global Palm) is a fledging palm oil plantation owner in Indonesia, which owns about 16.1k hectares (ha) of land in West Kalimantan, Indonesia, with a planted area of 11.9k ha.
In the near-term, Global Palm should be able to benefit from buoyant CPO prices, thanks to maturity profile of its plantations, where the average age of its trees is around 12.7 years.
To capitalise on the still buoyant demand for palm oil, it intends to rapidly increase its plantation, after having raised net proceeds of S$50.6m from its IPO last year.
Despite our relatively upbeat outlook, we note that Global Palm appears to be trading at a slightly higher multiple of 16.0x versus the simple average of 15.3x.
However, we believe that Global Palm should command a slightly higher multiple due to its growth potential (albeit from a small base).
As such, we are ascribing a price multiple of 18x to its FY11F EPS, and this translates to a fair value of S$0.40. However, as the stock looks fairly valued at the moment, we initiate coverage with a HOLD rating, but we see opportunity to revisit our rating on successful execution of its expansion plan. (Carey Wong)
It's all about "how much you made when you were right" & "how little you lost when you were wrong"