Golden Agri

Golden Agri: Weak results which was below street estimates. Rev at US$1.5b, +14% yoy and -9.2% qoq, while core net profit at US$36m, -60% yoy and -59% qoq. Result brings FY12 rev to US$6.1b, +2% yoy and core net profit to US$404m, -29% yoy. Weak results was due to lower CPO prices and higher soybean raw material cost, together with continued govt efforts to control inflation in China. Average CPO prices for 2012 decreased 11% to US$959 per ton vs US$1,083 yoy. A notable fact to highlight is that the gross profit margin for the Group's China agri-business declined from 5.8% to 0.8%, due to the competitive Chinese operating environment. For the yr, grp achieved a new record year of production. Fresh fruit bunch production and palm products output for 2012 grew 14% and 10%, respectively, to 9.7m ton and 2.9m ton. Strong increase was supported by favourable weather conditions and expansion of mature area by 25,550ha. Going forward, grp will continue to focus on a sustainable devt in both upstream and downstream businesses to benefit from operating an integrated value chain. GAR has budgeted to spend US$550m in capex for 2013. GAR is of the view that palm oil industry remains resilient with its robust fundamentals as demand for CPOwill continue to grow, supported by strong primary demand for edible oils, alternative uses such as oleochemicals, specialty fats and biodiesel, as well as substitution effect given its price advantage over other oils. In early 2013, CPO prices have gradually strengthened. Ratings as follow: CIMB maintains Neutral with $0.70 TP CS maintains O/p with $0.80 TP