Company Name: GOLDEN AGRI-RESOURCES LTD
| Research House: OCBC | Price Call: BUY | Target Price: 0.65 |
Golden Agri (E5H.SG) is up 4.7% at $0.555 despite reporting 1Q13 net profit fell 30.4% on-year to US$112.8 million ($139.7 million). The results were within expectations at 22% of full-year forecasts, OCBC says in a note, adding net profit was up 111% on-quarter, helped by improvement in its China operations, an inventory selldown and lower operating expenses. The inventory drop to 398,000 tons, down by 122,000 tons, was a relief, it says. It upgrades GAR to Buy from Hold, keeping a $0.63 fair value.
"While CPO prices may still remain weak in the near term, headwinds appear to be dissipating; management is also remaining fairly upbeat about its prospects," it says. "Coupled with the recent fall in share price, GAR now looks relatively attractive." The stock is still down around 15% year-to-date. Nomura says the results were above its expectation, at 31% of its full-year estimate.
But Nomura plans to keeps its full-year estimates intact, viewing the excess inventory sales as unsustainable, while expecting 4Q12's supply-chain bottleneck is likely to repeat again this year and as China soy-crushing margins remain uncertain. It keeps a Neutral call with $0.65 target.
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