Golden Agri-Resources

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#31
Lower Q1 earnings but higher revenue for plantation group
Published on May 15, 2014 1:09 AM



By Grace Leong

GOLDEN Agri-Resources posted slightly lower first-quarter earnings from a year earlier on lower refining margins amid tight crude palm oil supply and a challenging operating environment in China for oilseeds.

Net profit slipped 8 per cent to US$104 million (S$130 million).

Revenue, however, jumped 33.8 per cent to US$1.91 billion owing to higher sales of palm and laurics, higher output from plantation and palm oil mills and average international crude palm oil prices climbing to US$865 a tonne from US$797 a tonne.

The mainboard-listed palm plantation group said its fresh fruit bunch output for the quarter jumped 4.4 per cent to 2.24 million tonnes, while palm product output for the quarter grew to 691,000 tonnes from 664,000 tonnes a year ago.

Earnings per share was 0.81 US cents, down from 0.88 US cents a year earlier.

Net asset value per share as at March 31 was 69 US cents, up from 68 US cents as at Dec 31 last year.

Mr Franky Widjaja, Golden Agri's chairman and chief executive, said: "Demand growth is expected to continue in both food and non-food usage which include biodiesel and oleo-chemicals. The industry experienced positive momentum starting from the second half of 2013 after the Indonesian government's announcement to increase its biofuel targets.

"On the supply side, there is increasing evidence of a potential El Nino occurring this year, which historically is positive for palm oil prices. Meanwhile, we expect CPO prices to continue to be volatile as influenced by global economic conditions and crude oil prices."

The outlook for the palm oil industry is expected to remain positive, supported by robust primary demand growth for edible oils, substitutes and alternative uses such as oleo-chemicals and biodiesel, while supply growth is limited, the company said.

But the group's operating performance will be affected by the sustainability of the global economic recovery, climatic conditions, as well as developments in Indonesia and China, it said.

gleong@sph.com.sg

Background story

POSITIVE OUTLOOK

Demand growth is expected to continue in both food and non-food usage... The industry experienced positive momentum starting from the second half of 2013 after the Indonesian government's announcement to increase its biofuel targets.

- Mr Franky Widjaja, Golden Agri's chairman and CEO
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#32
Hi Buddies,

I find this quarter results puzzling. Maybe someone can enlighten me.

http://infopub.sgx.com/FileOpen/GAR24-14...eID=296928

slide 7

The revenue from segment of palm and lauric increased from 1125 to 1636 million USD

Yet margin fall from 6.6% to 1.8%. A drastic drop, leading to a lower GP for segment of 29.6 mio compared to 73.9 mio

The reason proposed is due to poor refining margin due to tight CPO supply.

The weird thing is:
Golden agri is a vertically integrated company, from slide 13 show the production of CPO and PK increasing, isn't it a case of left hand sell to right hand, the CPO get further processed by mills also owned by golden agri? Why is there tight supply?

If the downstream mill also processed CPO of other plantations, and margins fall so drastically, it means there is more supply than demand and the utilisation rate is low, a trend that will worsen if El Nino do happen, then why are they building more mills downstream?

Little surprise they made a loss at China, since Wilmar also had it rough.
life goes in cycles, predictable yet uncontrollable; just like the markets, but markets give you a second chance
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#33
Oilseed Industry in India Expects Import Tax Rise, Mistry Says

http://www.bloomberg.com/news/2014-05-27...-says.html

Highlight: Expects Modi to increase import duties of CPO to 5% and double that of processed palm oil to 20%. Mention producers able to absorb by slashing price, but will nonetheless hurt Indonesia producers but benefit India refiners.
life goes in cycles, predictable yet uncontrollable; just like the markets, but markets give you a second chance
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#34
Indonesia charges higher export duty on crude palm oil export, but lower duty on processed palm oil export, correct me if I am wrong. Depending on the overall duty paid on both countries, the traders can adjust which form of palm oil to be exported.
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#35
In terms of demand, CPO should do better, give the article mention India has many refineries that are idle and need raw CPO. Indonesia want higher economic value generated and lower export tax of processed CPO. So what India doing is neutralizing indo lower export taxes.

But generally, I still view the news as generally negative for golden Agri unless CPO price continue to hike. I however do not think it is too much of an jmpact, the proportion of CPO to processed for golden Agri iirc is still 3:1, and the latest capex has to do with building bio- disel refinery which is aimed at local indo market
life goes in cycles, predictable yet uncontrollable; just like the markets, but markets give you a second chance
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#36
India is playing a dangerous game with the palm oil producer countries. At any time, Indonesia can ban the export of crude palm oil just as it did to ore export. Without the security of sourcing enough CPO, blindly building refinery capacity in a country which produces no CPO is playing with fire. The next one could the power industry in India. They are building many coal power generation facilities without securing the supply of coal. Coal India apparently can't supply enough.

The local refinery business in Indonesia will be pressured, such as Golden Agri and Wilmar and many others as there are more demand for CPO thus higher pressure for refinery margins as we already saw in the recent report from Wilmar or Golden Agri.

I would not be surprised to know that Wilmar and/or Golden Agri and others are lobbying the Indonesia government to ban export of CPO in the sake of protecting local business and creating job for the locals.

Around 10 years ago, similar thing happened in China. That's how Wilmar became the biggest soybean miller in China. Will it happen in India?
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#37
http://www.businesstimes.com.sg/premium/...a-20140815

PUBLISHED AUGUST 15, 2014
Golden Agri: operations in Liberia unaffected by Ebola
Q2 profit falls 40% despite revenue rise; palm, laurics segment face margin pressure
BYANDREA SOH
sandrea@sph.com.sg @AndreaSohBT

PALM oil plantation company Golden-Agri Resources has said that its operations in the West African country of Liberia are unaffected by the outbreak of Ebola for now, and that there has been no case of the disease within its area of operations - PHOTO: BLOOMBERG
PALM oil plantation company Golden-Agri Resources has said that its operations in the West African country of Liberia are unaffected by the outbreak of Ebola for now, and that there has been no case of the disease within its area of operations.
The company in fact expects to step up on planting this year from last year's level; planting had slowed down then as a result of local social issues.
Its chief financial officer Rafael Concepcion said at a results briefing: "The operations are running as normal, but we have taken preventive measures such as screening people for illnesses and restricting non-essential travel among our employees."
The plantations are a few hundred kilometres from where Ebola has broken out, he added.
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#38
Results is bad:

http://infopub.sgx.com/FileOpen/GAR46-12...eID=324054

- PBT down 76% despite revenue up 17%
- GPM kena squeeze to 15% from average 17% from previous quarters
- huge exchange loss
- huge other operating income thanks to the unrealised gain on quoted investments
- EPS for Q3 S$0.038 meaning annualised S$0.1536, meaning PE of more than 300 times!!
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#39
The biggest cause continue to the poor refinery rate and the China operations ...

Refinery rate is less than 1%

Production is increasing yet refinery rate is falling?
life goes in cycles, predictable yet uncontrollable; just like the markets, but markets give you a second chance
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#40
(12-11-2014, 06:17 PM)valuebuddies Wrote: Results is bad:

http://infopub.sgx.com/FileOpen/GAR46-12...eID=324054

- PBT down 76% despite revenue up 17%
- GPM kena squeeze to 15% from average 17% from previous quarters
- huge exchange loss
- huge other operating income thanks to the unrealised gain on quoted investments
- EPS for Q3 S$0.038 meaning annualised S$0.1536, meaning PE of more than 300 times!!

Just would like to clarify on my post above. My calculation of PE at "more than 300" is based on annualised Q3 EPS figure.

If based on annualised 9m EPS figure, it will be approximately 27 times.
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