Rice prices likely to be low. The Food and Agriculture Organization of the United Nations (FAO) published its annual world rice outlook last week. The pertinent points stated are production exceeds supply and inventory levels are at record levels; the quick conclusion is that global rice prices will likely trend down. This is good news for Bernas as it will be able to source rice at lower cost and help boost margins and profits. No change to our earnings forecasts which have incorporated margin expansion. We maintain our Hold call given the limited upside to our DDM-based RM3.40 target price.

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Source: Maybank Research - 9 May 2012