GoldenAgri

GoldenAgri: Announced 4Q11 results which were below estimates. 4Q11 Rev at US$1.3b, +12% yoy and -16.7% qoq, while Core net profit at US$91m, -38% yoy and -17.3% qoq. Result brings FY11 rev to US$5.95b, +70% yoy and core net profit to US$571m, +48% yoy. Ebita Margins fell slightly at 15..8% vs 18.9% yoy.

For the qtr, decrease in palm products output and weaker CPO prices vs 4Q10 contributed to the poor results, further weighed upon by higher fertilizer costs and export tax. Positive refining margins by Indo’s export tax changes, was offset by negative export margins into China and India.

FY11 saw palm products output reached a record level at 2.64m ton, +16% yoy supported by favorable weather conditions and expansion of mature area by 27,300 ha, while Grp increased its FFB yield by 5% to 21.8ton/ha in 2011 from 20.8 ton/ha in 2010, while improvement of palm products yield was even larger at 6% to a notable 6.1 ton/ha, from 5.8 tons yoy, underpinned by higher oil extraction rate.

Going forward, grp remains confident of outlook, and continues to believe that the palm oil industry will stay resilient, underpinned by solid industry demand and supply fundamentals. Grp has budgeted ccapex of US$500 m for investments in upstream projects involving the expansion of plantation area and milling capacity, as well as investments in downstream projects to boost refining capacity and supporting facilities

We note that grp’s fundamentals remains strong, with a low gearing ratio on 9% and at current price, grp trades at 12.9x P/E. Technically, YTD high of $0.79 may act as a cap. Ratings as follow:

CIMB downgrades to neutral with $0.75 TP.
Deutsche maintains Hold with $0.75 TP
Goldman maintains Buy with $0.84 TP
Macquarie maintains Neutral with $0.83 TP
Merrill Lynch maintains Buy with $0.90 TP
UOB Kay Hian maintains Buy with $0.95 TP