Global Palm Resources (GPR) posted 1Q13 revenue of IDR66.8b, down 33% YoY and 4% QoQ, while reported net profit tumbled 36% YoY to IDR8.3b, meeting 20% and 16% of our full-year revenue and net profit estimates, respectively. While GPR has maintained its new planting target of 300-400ha for this year, it has made a very slow start, planting just 5ha in 1Q13 (versus 166ha in 1Q12) – the lowest new planting since 1Q11. Meanwhile, the outlook also remains muted, given the still-sluggish CPO prices and an impending increase in labour cost (with the upward revision in Indonesia’s minimum wages this year). Until we see fresh progress in its land negotiation and/or acquisition of either new or existing plantations, we opt to keep our HOLD rating and S$0.17 fair value (based on 10x FY13F EPS).
Dismal start to FY13 as expected
Global Palm Resources (GPR) posted 1Q13 revenue of IDR66.8b, down 33% YoY and 4% QoQ, hit by softer CPO (crude palm oil) prices as well as lower volume sold. Reported net profit tumbled 36% YoY to IDR8.3b; GPR posted a net loss of IDR85.7b in 4Q12 due to a large bio-asset revaluation loss of IDR116.9b. That said, results were in line with our expectations, as revenue met 20% of our full-year forecast while earnings met 16%.
Inventory fell 42% QoQ
Although volume sold fell 12% YoY to 11.1k tonnes, it was up nearly 3% QoQ; and together with a 28% seasonal fall in CPO production to 9.1k tonnes, this resulted in a 42% reduction in inventory to around 4.5k tonnes as at end-Mar. However, with GPR still expecting to see a pretty robust 11% growth in FFB production this year, any rebound in inventory could still remain a concern.
Just planted 5ha in 1Q
While GPR has maintained its new planting target of 300-400ha for this year, it has made a very slow start, planting just 5ha in 1Q13 (versus 166ha in 1Q12) – the lowest new planting since 1Q11. Previously, management blamed the slow new planting on the “increasingly more difficult” negotiation process with the local population. However, we understand that GPR is making “good progress” in terms of socialization with the local population and the next step for the company is to obtain a plantation business permit and start land compensation negotiations.
Maintain HOLD with S$0.17 fair value
In any case, the outlook also remains muted, given the still-sluggish CPO prices and an impending increase in labour cost (with the upward revision in Indonesia’s minimum wages this year). Until we see fresh progress in its land negotiation and/or acquisition of either new or existing plantations, we opt to keep our HOLD rating and S$0.17 fair value (based on 10x FY13F EPS).
Global Palm Resources (GPR) posted 1Q13 revenue of IDR66.8b, down 33% YoY and 4% QoQ, hit by softer CPO (crude palm oil) prices as well as lower volume sold. Reported net profit tumbled 36% YoY to IDR8.3b; GPR posted a net loss of IDR85.7b in 4Q12 due to a large bio-asset revaluation loss of IDR116.9b. That said, results were in line with our expectations, as revenue met 20% of our full-year forecast while earnings met 16%.
Inventory fell 42% QoQ
Although volume sold fell 12% YoY to 11.1k tonnes, it was up nearly 3% QoQ; and together with a 28% seasonal fall in CPO production to 9.1k tonnes, this resulted in a 42% reduction in inventory to around 4.5k tonnes as at end-Mar. However, with GPR still expecting to see a pretty robust 11% growth in FFB production this year, any rebound in inventory could still remain a concern.
Just planted 5ha in 1Q
While GPR has maintained its new planting target of 300-400ha for this year, it has made a very slow start, planting just 5ha in 1Q13 (versus 166ha in 1Q12) – the lowest new planting since 1Q11. Previously, management blamed the slow new planting on the “increasingly more difficult” negotiation process with the local population. However, we understand that GPR is making “good progress” in terms of socialization with the local population and the next step for the company is to obtain a plantation business permit and start land compensation negotiations.
Maintain HOLD with S$0.17 fair value
In any case, the outlook also remains muted, given the still-sluggish CPO prices and an impending increase in labour cost (with the upward revision in Indonesia’s minimum wages this year). Until we see fresh progress in its land negotiation and/or acquisition of either new or existing plantations, we opt to keep our HOLD rating and S$0.17 fair value (based on 10x FY13F EPS).
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