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Golden Agri-Resources - OCBC Investment 2021-08-17: Support From Higher CPO Prices

GOLDEN AGRI-RESOURCES LTD (SGX:E5H) | SGinvestors.io GOLDEN AGRI-RESOURCES LTD (SGX:E5H)

Golden Agri-Resources - Support From Higher CPO Prices

  • Golden Agri-Resources reported better performances across segments.
  • FFB production target was revised to 12% y-o-y.
  • Potential listing of its 56.27%-owned indirect subsidiary.



Golden Agri-Resources's results above expectations

  • Golden Agri-Resources (SGX:E5H)’s 1H21 revenue rose 31.4% y-o-y to US$4.5b while EBITDA jumped 176.2% y-o-y to US$522.7m, mainly driven by sustained strong CPO prices and higher palm product output. As such, bottomline turned from a loss of US$156.9m in 1H20 to a profit of US$153.2m in 1H21, above our expectations.
  • An interim dividend of S$0.00528 was declared by Golden Agri-Resources.


Upstream business benefitted from firm CPO prices

  • Revenue for Plantations and Palm oil mills rose 66.9% y-o-y to US$1.0b while EBITDA surged 177.2% y-o-y to US$365.0m in 1H21, mainly driven by higher CPO prices (+29.2% y-o-y after export tax and levy), together with higher fresh fruit bunch production (FFB) (+27% y-o-y) and palm product output (+31% y-o-y) on the back of favourable weather conditions.
  • Management raised their FFB production guidance for FY21 from 10% to 12% y-o-y but expects a weaker production in 2H21 after an exceptionally strong first half this year and high base in 4Q20.


Improving downstream margin despite lower sales volumes

  • For Palm, Laurics and Others segment, 1H21 revenue was up 31.1% to US$4.4b while EBITDA jumped 172.3% y-o-y to US$158.4 on higher average selling prices and better margins. Sales volumes, however, declined by 4% y-o-y due to the timing of delivery resulting in higher inventory level as at end June 2021.


A slight ESG valuation discount applied






Ivy NG Lee Fang CFA OCBC Investment Research | Nagulan RAVI OCBC Investment | https://www.iocbc.com/ 2021-08-17
SGX Stock Analyst Report HOLD MAINTAIN HOLD 0.250 SAME 0.250



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