UOB Kay Hian in a Nov 1 research report says: "Indofood Agri Resources’ (IFAR) core net profit declined 20% y-o-y to Rp774 billion in 9M10.

"This was mainly attributable to: (a) lower total sales by 3.8% y-o-y, (b) lower forex gain from Rp250.9 billion in 9M09 to Rp65.4 billion in 9M10 and (c) higher operating expenses. Quarterly net profit increased 26% q-o-q on higher crude palm oil (CPO) and palm kernal average selling prices (ASP). Revenue declined 1.8% y-o-y on lower sales volume.

"We lower our earnings forecasts by 18.5% to Rp1,109 billion for 2010 and by 13.0% to Rp1,478 billion for 2011 to factor in lower cooking oil price assumption as well as sales volume due to stiff competition in the domestic cooking oil market. Fair price of $2.65 as we lowered our PE valuation to 13x 2012F PE. DOWNGRADE TO HOLD."

OCBC Investment Research in an Oct 26 research report says: "Golden Agri Resources (GAR) is likely to see a pretty decent 3Q10 performance, aided by the recovery in CPO (crude palm oil) prices in the later half of the quarter as well as higher CPO output from its estates.

"As a recap, CPO prices have recovered sharply from an average of US$791/ton in 2Q10 to around US$821/ton; and we may see further room for earnings upside in 4Q10 as well, given that CPO prices are now hovering around US$900/ton. In view of the still upbeat outlook for CPO, we are raising our CPO assumptions for both FY2010 and FY2011 and we now expect prices to average around US$825/ton and US$860/ton respectively (versus US$800/ton).

"While bearing in mind the potential rise in export taxes, we also raise our earnings estimates for FY10 by 5.6% and for FY11 by 14.0%. As a result, our fair value improves to 78 cents. MAINTAIN BUY."