Golden Agri to benefit from China and Indonesia businesses in 2015

After posting losses in 2014.

There’s better harvest in the coming year, as Golden Agri expects to rake in more profits.

According to UOB Kay Hian, its oilseeds business is likely to report a better contribution for 1Q15 as the soybean crushing margin in China has improved substantially.

Meanwhile, the implementation of an export levy on palm oil in Indonesia would be positive to refiners.

In the past two weeks, GGR has bought back about 102.8m shares (1.6% of free float) for a total of S$43.4m. The share buyback was mainly supported by the additional cash available with the slowdown in capex expenditure in 2015. Also, this shows management’s confidence
in the company’s outlook after the weak performance in 2014 due to losses in its oilseed business. While management has yet to decide on the option with the treasury shares purchased, it could be distributed out as part of the employee stock option scheme later.

After posting losses in 2014, 2015 will be a slightly better year for GGR’s oilseeds business in China. Its 2014 performance was mainly affected by the poor timing of soybean purchases while operations in China remained challenging. Soybean crushing margin in China has improved substantially in 1Q15 at an average of US$95/tonne (vs US$24/tonne in 4Q14 and US$0.7/tonne in 1Q14.

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