Kencana Agri’s FY10 earnings beat our expectation as 4Q production recovered and exceeded our estimates by 9.4%. 1H production this year could still be below potential but on a full year basis, it should be back on a double-digit growth path due to a very strong 2H.
We continue to believe Kencana is a multi-bagger in the making. Given its thin liquidity, it is a stock that investors need to buy during a downcycle if one wants to build up a meaningful stake. Our target price is maintained at SGD0.60 based on a sum of parts (18x CY11 earnings plus EV on forward planting of 8k ha this year). The stock will trade at a single-digit PE based on CY12 earnings.
We continue to believe Kencana is a multi-bagger in the making. Given its thin liquidity, it is a stock that investors need to buy during a downcycle if one wants to build up a meaningful stake. Our target price is maintained at SGD0.60 based on a sum of parts (18x CY11 earnings plus EV on forward planting of 8k ha this year). The stock will trade at a single-digit PE based on CY12 earnings.
No comments:
Post a Comment