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
- Golden Agri-Resources's announced the potential listing of its 56.27%-owned indirect subsidiary Gemini Edibles & Fats India Limited (GEF). Golden Agri-Resources plans to raise US$100m from the sale of shares which will predominantly be used to strengthen Golden Agri-Resources’s liquidity position.
- Post-IPO, Golden Agri-Resources is expected to remain the largest shareholder of GEF. After adjustments and applying a slight ESG valuation discount, our fair value estimate remains at S$0.25.
- See
Ivy NG Lee Fang CFA
OCBC Investment Research
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Nagulan RAVI
OCBC Investment
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https://www.iocbc.com/
2021-08-17
SGX Stock
Analyst Report
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