Golden Agri-Resources (GAR) was recently included in the 2017 Dow Jones Sustainability Indices (Asia Pacific) in recognition of its sustainability leadership within its industry, marking the first time that GAR is made a member of the DJSI which was launched in 1999.

In June this year, Norway banned the public procurement and use of biofuel based on palm oil, a year after its government pledged that the state will not contribute to deforestation of the world’s rainforests.

It remains to be seen if other European countries will follow in Norway’s footsteps; the EU is the second-largest importer of palm oil, behind India. As such, sustainable practices should be one of the factors that investors in the sector have to look out for.

Meanwhile, short term price fluctuations of stocks are still highly correlated with crude palm oil prices. With the change in analyst coverage, we tweak our estimates and our fair value eases slightly from S$0.36 to S$0.35. Maintain HOLD, in consideration of the nearer term outlook with few catalysts for now.

Source: OCBC Research - 5 Oct 2017