Golden Agri-Resources (GAR) reported 4Q15 revenue easing 15% YoY to US$1551.7m, weighed by lower CPO prices. A large US$197.7m bio-asset fair value loss led to a wider net loss of US$88.4m versus US$21.9m in 4Q14. However, core earnings would have risen 13% to US$51.5m.

For FY15, revenue slipped 15% to US$6510.1m, or about 3% below our forecast, while GAR reported a net loss of US$16.7m, core earnings was flat at US$221.4m, or 1.2% shy of our estimate. GAR declared a final dividend of 0.5 US cent/share, versus a total of 0.585 US cent in FY14.

In 2016, GAR expects to see lower production due to the El Nino effect; but the impact will be mitigated by expected higher CPO prices. It adds that it will continue to optimise margins through further vertical integration of its operations, as well as improving its yield and cost efficiencies. We will have more after the analyst briefing.

For now, we maintain our HOLD rating but place our S$0.34 FV under review.

Source: OCBC Research - 1 Mar 2016