Golden Agri-Resources - OCBC Investment 2021-03-01: Better Performance Aided By Higher CPO Prices

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GOLDEN AGRI-RESOURCES LTD (SGX:E5H)

Golden Agri-Resources - Better Performance Aided By Higher CPO Prices

• Golden Agri-Resources's PATMI swung back into profit in 2H20.
• Recovery in downstream performance.
• Targeting FFB to grow +5% y-o-y.

Golden Agri-Resources's FY20 Results above expectations

• Golden Agri-Resources (SGX:E5H)’s FY20 results came in above consensus and our forecasts due to better 2H20 performance on the back of higher CPO prices and strong recovery in downstream business.
• Golden Agri-Resources’s FY20 revenue rose 10.0% to US$7.1b while EBITDA fell 4.0% to US$669.0m, mainly driven by higher CPO prices but partially offset by foreign exchange loss and lower fair value gain on financial assets.
• All-in, PATMI turned from a loss of USD156.9m in 1H20 to a gain of US$188.6m in 2H20, taking full year PATMI for FY20 to US$31.8m.
• A final dividend of S$0.0048 per share was declared by Golden Agri-Resources as compared to S$0.0058 per share in FY19.

Stronger CPO prices offset weaker production

• Revenue for Plantations and Palm oil mills rose 12.0% y-o-y to US$1.5b while EBITDA increased 39.2% y-o-y to US$416.1m in FY20.
• Golden Agri-Resources’s upstream business benefitted from higher CPO prices despite lower plantation output (-5% y-o-y) and Fresh fruit production (FFB) production (-6% y-o-y). Management expects FFB to grow 5% y-o-y for FY21 due to better weather conditions in FY20.

Improving downstream margin in 2H20 as economies reopened

• For Palm, Laurics and Others segment, FY20 revenue was up 10.4% to US$7.1b on higher average selling prices while EBITDA fell 36% to US$255.0m due to lower sales volume. Sales volume was impacted by lower availability of the palm oil feedstock and supply chain disruptions amid country lockdowns due to COVID-19. However, EBITDA margin improved 3.7 ppt h-o-h in 2H20 as countries reopened.
• Factoring in higher FFB forecast and average selling price assumption, our fair value estimate for Golden Agri-Resources is raised to S$ 0.21.
• See Golden Agri-Resources Share Price; Golden Agri-Resources Target Price; Golden Agri-Resources Analyst Reports; Golden Agri-Resources Dividend History; Golden Agri-Resources Announcements; Golden Agri-Resources Latest News.

Chu Peng OCBC Investment Research | https://www.iocbc.com/ 2021-03-01

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