Golden-Agri Resources (GAR) reported an 11.0% YoY fall in revenue to US$1.6b and a 22.3% drop in gross profit to US$192.8m in 1Q19. Along with a similar drop in operating expenses, higher foreign exchange gain and US$11.4m gain on disposal of a subsidiary, GAR registered a 54.5% rise in net profit to US$18.3m for the quarter. This constituted 17% of ours and the street’s full year expectations.

EBITDA from plantation and palm oil mills fell by 35.9% to US$60.8m with lower CPO prices compared to a year ago, offset by higher sales volume. For palm, laurics and others, EBITDA was higher at US$59.3m vs. US$28.0m a year ago with additional contribution from biodiesel and the removal of palm oil export levy from Indonesia.

We maintain our HOLD rating and fair value estimate of S$0.29 for GAR.

Source: OCBC Research - 14 May 2019