Golden Agri: HSBC Global Natural Resources Conference takeaway.
2H11 output risks remain on the upside, continuing the trend set in 1H11. Mgt expects overall volumes to be higher HoH due to favourable weather conditions.
Nestle’s recent return as a customer is a positive following environmental issues last year and mgt claims its new sustainability practices are at an advanced stage. The Group has received membership in the industry sustainability watchdog – RSPO – and has been issued green certificates for 15k ha of plantations. This will rapidly expand, according to mgt, while the Group will also pick up pace in expanding acreage. GGR has sufficient landbank to expand for three years.
With a maturity profile biased towards the younger end, HSBC expects GGR to see earnings expansion going in to FY12e despite lower palm oil prices. Maintains Overweight with TP $0.82.
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