Golden Agri-Resources (GAR) reported an 11.3% YoY fall in revenue to US$1.8b and a 68.4% drop in net profit to US$11.9m in 1Q18, such that the latter accounted for only 6% of ours and the street’s full year estimates.

Gross profit margin was 13.7% vs. 14.2% a year ago; the operating performance of the group was affected by lower production output (tree-stress effect after high production in 2017 following recovery from El Nino) and softer crude palm oil prices during the period.

There was also a US$3m share of loss in JVs due to loss in a JV that started commercial operations in 4Q17. Pending an analyst briefing, we put both our hold rating and FV estimate of S$0.37 under review.

Source: OCBC Research - 15 May 2018