Maybank Cuts Padiberas Nasional To Hold From Buy

 Maybank downgrades Padiberas Nasional (6866.KU) to Hold from Buy and lowers its target to MYR3.40 from MYR3.90. 

The house says 9-month 2011 core net income 5.2% higher on-year at MYR147.4 million was below its expectations, making up 65% of its full-year forecast. 

It notes average selling prices remain stagnant as any price increases are contrained by government regulations; "we think the impending 13th General Elections (GE13) may impede approval for price increases in the near term.

 But there should be a definitive price escalation resolution beyond March 2012 as the rice stock will be depleted by then and Bernas will have to re-price accordingly." 

It adds, Thailand's policy to buy paddy at higher prices as well as the flood impact there is leading to more price fluctuations for rice as people start to hoard. Thus "we have lowered our 2011-13 earnings forecasts by 21.9%, 17.0% and 16.6% respectively," the house says. The stock is off % at MYR3.10.