Golden Agri in recovery mode

SINGAPORE (Aug 15): UOB Kay Hian and RHB are maintaining their “buy” recommendation for Golden Agri-Resources (GAR) with target prices of 42 cents and 44 cents respectively even after GAR’s 2Q results were boosted by a one-off gain.

To recap, GAR’s 2Q16 earnings of US$39.5 million ($53.1 million) were lifted by a deferred tax income of US$104 million. Excluding the one-off, the group would have recorded a net loss of US$54.4 million from the fall in FFB (fresh fruit bunches) production.

UOB Kay Hian notes that GAR’s management expects FFB production to recover in the second half of the year with peak production coming in November or December, and has revised its nucleus FFB production guidance downwards to reflect a 15% to 20% decline for 2016, compared with its earlier guidance of a 10% to 15% decline.

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