THOUGH Golden Agri-Resources : E5H 0% expects to record a fair value loss of US$230 million for the fourth quarter ending Dec 31, the palm oil company still expects to be profitable in Q4 and for the full financial year.

 

The mainboard-listed company said in a profit guidance on Tuesday (Dec 20) that the fair value loss was a result of changes in the fair value of its investments in Q4. Nevertheless, the resulting fair value of the financial asset is still &ldquo well above its investment cost&rdquo , it noted.

 

In addition, the group recorded a net profit of US$675 million for the nine months ended Sep 30, suggesting that its business model &ldquo remains intact and resilient&rdquo , it said.

 

&ldquo The group has been able to leverage its integrated business model and successfully extract value throughout the value chain, including optimising the usage of its facilities, logistic capabilities, product portfolio and geographical presence,&rdquo it added.

 

The profit guidance is based on a preliminary review of the financial information currently available to the group. Further details of Golden Agri&rsquo s financial performance will be released on or before Mar 1, 2023 when the company announces its unaudited consolidated financial results for FY2022.

HUGE DIVIDENDS COMING : PALM OIL STOCKS ARE RISING AGAIN!

KOPERNIK Global Investors LLC &ndash an investment management company headquartered in Tampa, Florida &ndash has ceased to be a substantial shareholder of local palm oil player Golden Agri-Resources : E5H 0%.

 

In a bourse filing on Thursday (Nov 24), the company announced that Kopernik Global Investors had sold some 37.3 million shares of Golden Agri via a market transaction at a price of S$0.2934 apiece on Nov 3. 

 

The date on which Kopernik Global Investors &ldquo became aware&rdquo of the change in interest was listed as Nov 22 in the filing, with the accompanying explanation that the investment manager &ldquo regrets the delay in meeting the filing notification deadline&rdquo .   The date of notification to the listed issuer was Nov 22. 

 

Kopernik Global Investors has a deemed interest in the shares as it has discretionary power in the disposal rights over shares as an investment adviser, the filing said. 

 

With the sale, Kopernik Global Investors&rsquo deemed interest in Golden Agri has been pared to 4.91 per cent or 622.3 million shares, from 5.2 per cent or 659.6 million shares previously. 

 

RHB has upgraded its call on Golden Agri-Resources to &ldquo buy&rdquo from &ldquo neutral&rdquo , raising its earnings estimates on lower effective tax rates and higher contributions from downstream operations.

 

This comes after Golden Agri posted earnings of US$285 million for its third quarter ended Sep 30, up 148 per cent from US$115 million a year ago.

 

Noting that the earnings were &ldquo well above&rdquo expectations, RHB said that the palm oil producer had benefited from a two-month tax levy holiday and strong fresh fruit bunches (FFBs) growth in Q3.

 

FFBs are the raw material from which palm oil is extracted.

 

The research house raised its target price for Golden Agri to S$0.33 from S$0.30 previously, and also raised its FY2022 earnings estimates to US$836 million from US$666 million.

 

Its analysts described the company&rsquo s valuation as &ldquo attractive&rdquo and &ldquo inexpensive&rdquo , with it trading at a price-to-equity (PE) multiple of 5.7 times for FY2023. This is on the lower end of its peers, which are trading at a PE multiple of between five and nine times for FY2023.

 

They added that the competitiveness of Golden Agri&rsquo s downstream operations, which include the processing and sale of palm and other oilseed-based products, were a key driver for the company.

 

Looking ahead, RHB noted that Golden Agri will face taxes that were reinstated in mid-November, and could book losses on this as a result. However, its analysts predict that inventory drawdown amid stable costs will boost the company&rsquo s earnings in Q4.