Golden Agri has been trading from 0.52 to 0.60 since March 2013 after the 0.600 critical support was broken. Current support is at 0.52 which has been tested about 6 times since 3 months ago till now and holding. Possible to trade this 8 cents range for and accumulate on dips near 0.52 (probably from 0.52 to 0.535) support level. Short positions near 0.600 (probably from 0.575 to 0.600)can be considered too. As long as the 0.52 support and 0.60 resistance levels are not breached, it remains range bound. We will average up and increase long positions at 0.61 if the 0.600 resistance level clears out.
Stop loss for long or short positions once technical levels are broken.
OCBC – 10 June 2013
Golden Agri-Resources: Modestly firmer CPO boost
Golden Agri-Resources (GAR), being one of the largest palm
oil plantation owners in the world, should benefit from the
recent rebound in CPO (crude palm oil) prices to
MYR2450/ton; we note that there is a strong historical
correlation of nearly 0.7 between CPO prices and GAR share
price. While the general outlook for commodities is still
uncertain (as China’s economic growth continues to sputter
along), we believe that headwinds appear to be dissipating.
Furthermore, management remains fairly upbeat about its
prospects as it continues to expand its integrated operation
capabilities to benefit from the firm industry outlook.
Maintain BUY with an unchanged S$0.63 fair value (based
on 12.5x FY13F EPS).
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