As Golden Agri-Resources’ results for FY2020 ended Dec 31 were unexpectedly lifted by strong crude palm oil (CPO) prices and a new Indonesian export levy structure, most analysts are now turning positive on the palm oil player.

CGS-CIMB Research has upgraded its rating for the stock to “hold” from “reduce” and raised its target price to 19.9 cents from 11.7 cents previously.

The brokerage has also increased its FY2021-FY2022 earnings forecasts for the company on the back of higher CPO price forecasts of US$721-US$670 per metric tonne and improved downstream margins.


SEE:Golden Agri-Resources enhances sugar trading business with new Brazilian subsidiary


“The group expects CPO prices to be supported by the tight edible oil supply situation, which is likely to prevail in 1HFY2021,” CGS-CIMB analysts Ivy Ng Lee Fang and Nagulan Ravi write in a note dated Feb 26.

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RHB Securities, too, has upgraded its rating for the stock to “trading buy” from “sell” and raised its target price to 25 cents from 13 cents previously.

The brokerage has lifted its FY2020-FY2022 earnings forecasts for the company by more than eightfold, after raising and reducing its downstream margins and cost assumptions, respectively.

“We have admittedly been wrong in our expectations that Golden Agri will remain in the red, and now expect even stronger profits in FY2021 as it channels all of its CPO to downstream capacities to enjoy the tax differential,” RHB’s Singapore research team writes in a Feb 26 report.


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Nevertheless, OCBC Investment Research has maintained its “hold” rating for the stock albeit with a higher fair value of 21 cents.

This is despite the brokerage’s higher FFB forecast and average selling price assumption.

As at 10.41 am, Golden Agri was up 0.1 cent or 0.5% at 19.3 cents with 4.2 million shares changed hands.