Golden Agri-Resources (GAR) reported its 2Q15 results this morning, which came in mostly within expectation. Revenue slipped 10.2% YoY to US$1831.1m but it rebounded 17.9% QoQ as production improved; net profit came in at US$38.8m, +42.2% YoY and +125.5% QoQ. As such, 1H15 revenue, though down 14.4% at US$3384.4m, met 50% of our FY15 forecast; net profit tumbled 57.3% to US$55.9m, but still met 46% of our full-year estimate.

Going forward, management expects the operating environment for its oilseeds segment to remain challenging, and it will continue to review its business strategy and manage flexible production in its existing facilities in order to improve operating performance. We will have more after the analyst briefing shortly.

As GGR’s share price has fallen below our S$0.35 fair value (based on 13.5x FY15F EPS), we are placing our Sell rating and fair value under review.

Source: OCBC Research - 13 Aug 2015