Golden Agri

Golden Agri: 1Q13 results was in-line with estimates. 1Q13 net profit of US$112.8m (-30% YoY, +111% q/q), while revenue at US$1.4b, -6% y/y and -6% q/q. The weaker y/y top-line was largely due to a 25% y/y drop in CPO prices which saw revenue for the Indonesia Agri-business decreasing 11% to US$1.26b, despite higher sales volume. This was offset slightly by higher revenue in the group’s China Agri-business, which with increased 19.3% y/y to US$312.1m and the sell down of inventory and lower operating expenses. Operationally, the group was able to grow its y/y production through an increase in area of mature plantations by approximately 14,760 ha as well as favourable weather conditions. Palm products output for 1Q13 grew 7% y/y to 664,000 tons, but was down 22% q/q as a result of seasonality, with the first quarter historically the lowest producing period of the year. GGR’s total planted area stands at 464,300 ha, remaining the largest in Indonesia, of which 23% are immature and young plantations and 49% are at their prime age of 7 to 18 years. Going forward, group note that it started the year 2013 with better performance compared to the previous quarter and is of the view that the outlook of palm oil industry is still promising. GGR’s investments for this year are in plantation hectarage and milling capacity expansion; as well as downstream capacity and its supporting facilities; and extending distribution and logistic capabilities to be able to reach out to more destination markets. Ratings as follows: CIMB maintains neutral with $0.56 TP Deutsche maintains Sell with $0.50 TP UOB Kay Hian maintains Sell with $0.55 TP