Golden Agri-Resources - CGS-CIMB Research 2022-05-12: Expect A Weaker 2Q Due To Export Ban

Golden Agri-Resources - Expect A Weaker 2Q Due To Export Ban

GOLDEN AGRI-RESOURCES LTD (SGX:E5H)

Golden Agri-Resources (SGX:E5H) posted a 1Q22 core net profit of US$145m, which accounted for 34%/29% of our/consensus’ full-year forecasts. We consider the 1Q results to be above due to stronger-than-expected CPO price.
On a q-o-q basis, 1QFY22 core net profit fell 23%, which we gathered is due to lower profit from its downstream division. This could be due to export restrictions on Indonesian palm oil via the Domestic Market Obligation ruling from 27 Jan-18 Mar 2022.
Golden Agri-Resources is hopeful that the export ban will be lifted soon and cited some expectation in market for the ban to be lifted as early as 23 May 2022F.
We lift our FY22F EPS forecasts for Golden Agri-Resources by 13% to reflect our recently revised higher CPO price assumptions but cut FY23-FY24F earnings on higher operating costs. We lower our target price for Golden Agri-Resources to S$0.30 as we raise our discount to its sum-of-parts valuation to 20% from 10% to reflect concerns over the ongoing palm oil export ban, as well as our view that CPO price could trend lower in 2H22F.
We downgrade Golden Agri-Resources from Add to HOLD due to concerns that the policy to control prices in Indonesia will negatively impact profit margins for its estates.

Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @ https://www.itradecimb.com.sg/.

Ivy NG Lee Fang CFA CGS-CIMB Research | Nagulan RAVI CGS-CIMB Research | https://www.cgs-cimb.com 2022-05-12

SGX Stock Analyst Report HOLD DOWNGRADE ADD 0.30 DOWN 0.340