Golden Agri - RHB Invest 2016-03-01: Nice Finish To The Year

Golden Agri - RHB Invest 2016-03-01: Nice Finish To The Year GOLDEN AGRI-RESOURCES LTD E5H.SI 

Golden Agri - Nice Finish To The Year 

  • Golden Agri was the only SGX-listed planter whose results surprised on the upside, due to its downstream and oilseed processing earnings. 
  • We maintain our BUY recommendation on this stock, given its still inexpensive valuation of < 14x P/E and decent growth prospects. 
  • We raise our earnings and TP to SGD0.47 (from SGD0.42, 27% upside). This implies an EV/ha of USD20,000, in line with its SGX-listed peers but below that of its Malaysian-listed peers. 


Surprising on the upside. 

  • Golden Agri-Resources (Golden Agri) was the only SGX-listed planter whose FY15 results exceeded our estimates. Its downstream profits improved as a result of its increasing refining margins as well as a turnaround in the oilseeds division to the positive realm. 
  • Although FFB production rose 3% in FY15, the company is guiding for weaker (a negative single digit decline) FY16 FFB production growth on the back of the El Nino impact. 
  • We have already imputed a 5% decline for FY16 in our forecast, followed by a 1-3% improvement in FY17-18. 
  • Key risks include the reversal of CPO price trends as well as weaker-than-expected demand. 

A higher TP. 

  • We raise our earnings forecasts for FY16-17 by 12-14% and introduce our FY18 forecasts, after upping our oilseed division profits as well as boosting our refining margin. 
  • Our TP rises to SGD0.47 (from SGD0.42), based on 17x 2016 earnings. This implies an EV/ha of USD20,000/ha, in line with its SGX-listed peers but below that of its Malaysian-listed peers.



Singapore Research RHB Invest | http://www.rhbinvest.com.sg/ 2016-03-01
RHB Invest SGX Stock Analyst Report BUY MAINTAIN BUY 0.47 Up 0.42


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