Golden Agri

Golden Agri: CIMB detected good interest from investors during Golden Agri's recent NDR in the US due to the more buoyant CPO price. During the meetings, the group articulated its rationale for developing its downstream business, talked about its key strengths and addressed some concerns. CIMB are slightly more positive as its downstream moves appear to have paid off in 2013 and earnings should benefit from higher CPO prices and more manageable costs in 2014. Golden Agri revealed that it is scouting for M&As, planting up its existing landbank of 100k ha and investing in Africa (through its investment in Verdant Fund) to ensure growth in the upstream business. It also appears confident of sustaining the good performance of its China agribusiness and revealed that it is making good progress in expanding its downstream business, following the hiring of Cargill’s trading team in Singapore and some senior personnel from Louis Dreyfus. CIMB reckons that Golden Agri is a good liquid stock for investors looking to trade on the potential rise in CPO price if an El Nino emerges and dents palm oil supply growth. House maintains its HOLD call with $0.60 TP.