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Golden Agri-Resources - Adjusting for rights issue
Friday, June 26, 2009
Golden Agri share price will go ex of its proposed rights issue today. To recap, Golden Agri has proposed a fully underwritten 17-for-100 rights with free detachable warrants at S$0.18 per share. We are raising our net profit forecasts by 1-2% for FY09-FY11 to account for the net interest savings from the US$215m proceeds raise from the rights issue. However, we lowered our FY09-11 EPS by 8-13% due to the enlarged share base. Our target price is cut from S$0.48 to S$0.43 to account for the dilution from the rights issues. However, we are upgrading our call on the stock to Trading Buy from Neutral as valuation for the stock is now more attractive following the stock underperformance against the Singapore market. Since our last update on 5 June 2009, Golden Agri's share prices have tumbled 11% against the decline in the market of 2.4%. Key re-rating catalysts are potential earnings-enhancing M&A and lower than expected operating costs.
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Golden Agri Resources
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