Golden Agri

Golden Agri: has hired Hemant Bhatt, who was at Louis Dreyfus for 26 years (last position as CEO of Asian operation), as the CEO to lead Golden Agri’s downstream division. UBS says this signals the co’s ambition to grow its downstream business further. So far, Golden Agri’s downstream capacity is 2m tons of palm oil refining in Indonesia and 2m tons of soybean crushing in China. Golden Agri has indicated potential expansion into India’s downstream industry given India’s importance in palm oil market (16% of palm oil demand and largest importer). The co has not provided guidance on potential capacity build out, but based on import data. UBS estimates India could add additional 1.5m tons of refining capacity, which would cost US$180m to build. UBS keeps its Neutral rating with TP $0.70, based on EBIT/EV yield of 8% and assuming RM 2,817 /ton CPO price in 2013.