Despite Golden Agri-Resources’ weaker-than-expected results for 1QFY2021 ended March 31, RHB Securities has kept its “trading buy” rating and target price of 30 cents for the palm oil company.

The continued optimism is driven by the expectation that the company will record better earnings in the quarters ahead, as margins and volumes at its downstream division improves.

Moreover, the stock’s valuation remains inexpensive, at a single-digit price earnings ratio derived from its FY2021 earnings forecast, says RHB.

SEE:Golden Agri-Resources reports 1QFY21 earnings of US$41 mil, versus losses of US$95 mil last year

“We still expect Golden Agri to post a strong earnings recovery in FY2021, as it continues to channel its crude palm oil to its downstream refineries, which should start seeing the impact of the tax levy advantage from 2Q 2021 onwards,” the RHB Singapore research team writes in a note dated May 14.

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For now, however, the brokerage has cut its earnings estimates for Golden Agri by 28%-30%.

This is to account for lower downstream sales volumes and higher fresh fruit bunches projections, it says. 

Meanwhile, OCBC Investment Research says Golden Agri's 1Q FY2021 results came within its expectations.

The brokerage, which has a "hold" call for the stock, has raised its fair value to 25 cents from 21 cents previously.

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As at 4.13 pm, Golden Agri was flat at 24.5 cents with 10.6 million shares changed hands.