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Golden Agri-Resources
Rating HOLD (as at 14 August 2024)
Last Close SGD 0.27
Fair Value SGD 0.27
Lower fruit production
• EI Nino and accelerated replanting program weighed on fruit production
• Lower fresh fruit bunch (FFB) growth guidance for FY24
• Downstream business performed better in 1H24
Investment thesis
Golden Agri-Resources’s (GAR) 1H24 revenue rose 5.4% YoY to USD5.1b, driven by higher sales volume, albeit lower crude palm oil (CPO) prices. EBITDA rose 3.6% YoY while PATMI decreased 43.8% YoY. Revenue for plantations and palm oil mills declined 1% YoY to USD908m while EBITDA fell 3% YoY to USD213m in 1H24. The decline was mainly attributed to lower production output during the period as fruit production was impacted by the EI Nino last year and accelerated replanting program. While GAR expects FFB production to pick up in 2H24, it revised down its FFB full-year production guidance from low single-digit to -5% YoY.
For the Palm, Laurics and Others segment, 1H24 revenue and EBITDA increased 5% and 9% YoY to USD5.1b and USD282m respectively. The growth was mainly driven by higher sales volume (+11% YoY) as GAR continues to expand higher value-added downstream products.
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Bumitama Agri Ltd
Rating HOLD (as at 14 August 2024)
Last Close SGD 0.72
Fair Value SGD 0.77
Mixed bag of results with optimistic guidance for 2H24
• Interim dividend of 1.2 Singapore cents per share
declared, down 4% year-on-year (YoY)
• Increased output and resilient crude palm oil (CPO)
prices may bode well for stronger financial
performance in 2H24
• Share price upside turns more limited following a 21%
year-to-date (YTD) rally (as at 13 Aug 2024) and lower
fair value (FV) estimate of SGD0.77; however, we still
like the stock from a total returns perspective
Investment thesis
Bumitama Agri Ltd. (BAL) is a leading upstream
producer of CPO and palm kernel (PK) in Indonesia. It
operates a total planted area of 187k hectares (ha)
across Central and West Kalimantan, as well as Riau –
areas with good precipitation and temperatures well
suited for oil palm cultivation – with an average
plantation age of 14 years as at 30 Jun 2024. BAL’s
superior productivity, high quality plantations, and
continued focus on maximising its current plantations
places it in a good position to deliver on above industry
average yields and to capitalise on supportive long-
term industry fundamentals, where the dynamics of
constrained supply and growing demand should
provide some resilience to CPO prices. BAL is
increasingly being seen by the market as a dividend
yield play, with Refinitiv consensus expecting it to offer
a 12-month forward dividend yield of 6.6% at the time of
writing.
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Property Developers – Singapore
1H24: A Slight Miss For CLI; Worse-than-expected For CDL
CLI and CDL both reported weaker-than-expected results with the latter’s results hit by the timing of revenue recognition as well as a 25% yoy increase in financing cost for 1H24. While both saw continued strength in their respective lodging/hospitality segments in 1H24, CLI’s capital recycling targets appear to be on track versus delays for CDL. Maintain our BUY recommendations: We prefer CLI (target price: S$4.04) over CDL (target price lowered to S$7.00). Maintain OVERWEIGHT on the sector.
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Genting Singapore (GENS SP)
2Q24: Seasonally Softer; Slowing Recovery Pace
2Q24 results reflect the normalisation of operational volume in all business segments due to the absence of Chinese New Year, mega events and seasonally lower visitorship. Gaming revenue fell as VIP luck factor normalised from 1Q24’s high base. Meanwhile, non-gaming revenue was hampered (-11% qoq) by the closure of Hard Rock Hotel for renovations. We cut earnings on a slower recovery momentum despite remaining positive on GENS’ bargain valuations. Maintain BUY with a lower target price of S$1.18.
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Singapore Technologies Engineering (STE SP)
1H24: Results In Line; Expecting Record-high Levels Of Revenue And Profit In 2024
1H24 headline net profit rose 19.9% yoy to S$337m. Core net profit of S$326m (+16.4% yoy) was in line with our expectation, at 49.7% of our full-year forecast. The misses in EBIT of CA and USS have been offset by the strength of DPS. We expect STE’s revenue and profit to hit new highs in 2024, and remain positive on its medium-term growth outlook underpinned by the record-high orderbook level of S$27.9b. Maintain BUY with an unchanged target price of S$4.95.
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Genting Singapore (GENS SP)
2Q24: Seasonally Softer; Slowing Recovery Pace
2Q24 results reflect the normalisation of operational volume in all business segments due to the absence of Chinese New Year, mega events and seasonally lower visitorship. Gaming revenue fell as VIP luck factor normalised from 1Q24’s high base. Meanwhile, non-gaming revenue was hampered (-11% qoq) by the closure of Hard Rock Hotel for renovations. We cut earnings on a slower recovery momentum despite remaining
positive on GENS’ bargain valuations. Maintain BUY with a lower target price of S$1.18.
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