Towards Financial Freedom
Golden Agri - Decent FY13 Performance
Golden Agri (GAR)'s FY13 beat our forecast as well as consensus estimates. We maintain our BUY call on the stock, with an unchanged SGD0.66 FV. GAR remains a sector beta stock that has been lagging but should gain momentum on palm oil price's steady uptrend. We expect its profitability to improve owing to higher palm oil price, a drop in input cost and stronger contribution from its downstream segment.
- Strong results. After stripping out biological fair value gains and forex losses, GAR's FY13 core earnings came in at USD316.8m, beat ing our full year forecast by 12.7% and consensus by 10.6%.
- The key forecast items. The realised CPO price of USD809/tonne was slightly higher than our forecast of USD806/tonne while cash cost was lower at USD333/tonne vs our assumption of USD340. Nucleus FFB production was largely in line with our forecast of 7m tonnes.
- Hectarage change. GAR's nucleus planted area stood at 371,102 ha as at end-2013 versus 366,914 ha as at end-2012, while its mature nucleus area increased by 10k ha to 338,490 ha. The company has yet to recognize the 16k ha (USD11k/ha) acquired in 2012 in its books due to delay in the ownership transfer, but its management believes the process should be completed within 1H this year.
- Outlook. Management is optimistic on palm oil price, driven by biodiesel demand from Pertamina as well as the direct burning of palm oil by power company, PLN. GAR has no biodiesel exposure currently but is looking to build a 1m tonne biodiesel plant, to be ready in 2H2015.
- Forecast and FV. No change to our SGD0.66 FV. We lift our FY14 forecast by a mild 1.3% after a small 1.0% adjustment in our nucleus fresh fruit bunches (FFB) tonnage.
- Dividend. The company has declared a final dividend of 0.515 SGD cents, bringing the full year dividend to 1.1 cent. This represents a decline from the FY12 dividend of 1.19 cent, but an increased payout of 35% based on underlying profit compared to 30% historically.
Financial Exhibits
SWOT Analysis
Company Profile
Golden Agri is Indonesia's largest oil palm plantation company
Golden Agri is Indonesia's largest oil palm plantation company
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Source: OSK-DMG
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
