Golden Agri

Golden Agri: GAR reported 1H14 net profit of US$131m, -17% YoY. The earnings accounted for 31% of street estimates, below expectations. On a sequential basis, 2Q14 net profit of US$27m was 40% and 74% lower YoY and QoQ. The underperformance was led by weak palm & laurics earnings due to lower refining margins and higher 3rd party CPO purchases while the oilseeds division turned in an EBITDA loss of US$40m due to underutilization of plant and poor crushing margins in China. The bright spot remains in the upstream plantations operations which saw stronger production, slower cost of production and higher ASP on a YoY basis in 2Q. GAR’s balance sheet remains healthy with adj. net gearing of 0.26x (vs FY13 0.23x).