Golden Agri-Resources Ltd - Buy by OCBC

OCBC maintained its Buy call on Golden Agri-Resources Ltd on 6 April 10 with a fair value price of $0.72. This is in spite of the negative news that have been announced with regards to GAR's Indonesian subsidiary - PT Sinar Mas Agro Resources and Technology Tbk (SMART).

Recently, SMART has appointed independent verification from Control Union Certification (CUC) and BSI Group to conduct thorough verification of GreenPeace reports regarding sustainable oil palm production. GreenPeace has alleged that SMART has done improper land conversion and illegal planting of oil palm in deep peatland forests. These claims have resulted in Unilever (world's largest buyer of Crude Palm Oil) and Nestle (world's biggest food company) to drop SMART as their CPO supplier. Cargill, the largest trader of agricultural commodities, is also reconsidering its relationship with SMART.

However, with strengthening CPO prices, OCBC expects revenue and earnings for FY10 to improve.