Goldenagri

GGR: 9M12 results below consensus estimates. 3Q12 Net profit, -20% YoY to US$86m following the 8% YoY drop in CPO ASP to US$993/t and higher raw material input costs (soybean) from the China business. This is despite the strong CPO vo growth QoQ/YoY. So on a 9M12 basis, net profit is still -32% YoY to US$356m (63% consensus). Stripping out the forex impact, EBITDA decline is more muted at 15% to US$643m. 3Q12 CPO production rose 24% QoQ (16% YoY) to 0.65m tons, bringing 9M12 production to 1.67m, which was in line with GAR’s guidance of 5-10% volume growth in 2012. Within the China business, raw materials (soybean) costs had escalated. But the negative impact was cushioned by the wider cost spread across a larger CPO tonnage. So on a per unit basis, production cash cost actually dropped from US$307/t in 2Q12 to US$288/t in 3Q12. Going forward, market watchers are expecting cost pressure to ease given softening in soybean prices and the loosening of the Chinese credit policy. Overall ratings as follow: Citi maintains Buy but cuts TP to $0.83 from $1.01 CLSA maintains Buy with $0.81 TP CS maintains Buy but cuts TP to $0.87 from $0.92 Nomura maintains Buy with $0.95 TP HSBC maintains Neutral with $0.67 TP