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Saturday, September 8, 2012

Golden Agri positions may be unwound: OCBC


Some institutional investors may unwind their existing Golden Agri position if they are keen to take up its convertible bond, as a hedging measure, OCBC says in a note to clients.

The house expects the bond issue to reduce its FY12 net gearing to 5.6x from FY11’s 10.1X.
“While we think that the company is just being opportunistic in raising capital, as the market is generally more receptive towards yield-bearing instruments amidst the low interest rate environment, the more muted outlook for CPO prices in 3Q and 4Q of 2012 could start weighing on sentiment.” But it says unless CPO prices pull back sharply, it expects the company to meet its earnings forecasts, keeping a Buy call with $0.81 fair value.

The stock is down 3.6% at $0.67

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