Golden Agri-Resources (E5H.SG) is +2.3% at $0.660, for a second day of gains, possibly marking a bottom after its 13.2% fall from the early March high of $0.720 to last week’s low at $0.625.

OCBC says the stock recently was “no doubt weighed by the decline in crude palm oil prices, given that the group is one of the largest oil palm plantation owners in Indonesia.” 

 

Analyst Carey Wong says the house has already taken the impact of softening CPO prices into its assumptions, with a base CPO price assumption of US$950/ton for the whole of this year, compared with the current price at US$1,108 ($1,402). 

 

“Meanwhile, we believe that any sharp tumble in CPO prices is unlikely, given the still rising crude oil prices. Short-term market volatility notwithstanding, we remain sanguine about the growing demand for CPO-based products from rapidly developing countries such as China, India and Indonesia over the medium term.” 

 

The house maintains its Buy call with $0.88 fair value, based on 17X FY11F core EPS.