Golden Agri’s share price crashed to 52-week low as CPO prices plunge

The worst is not yet over for this battered stock.

Golden Agri-Resources’ share price crashed to a fresh one-year low of $0.41 on January 22 and 23, dragged down by the recent pullback in crude palm oil prices.

According to OCBC, there are more downside risks in the near-term for GAR, whose share price is expected to slip to $0.40 before stabilizing.

OCBC cautions that the persistent weakness in crude oil prices could continue to weigh on CPO prices, while the demand for CPO is also expected to decline in the winter months.

Apart from these risks, the low prices of competing vegetable oils like soy and corn will further reduce the substitution effect.

GAR is also expected to suffer from sluggish global demand following the cut in global economic growth expected for 2015, especially in China.