Additional planted landbank for Golden Agri projected

M&A reportedly in its sights.

Golden Agri-Resources (Golden Agri) ) recently expanded its landbank by acquiring some 3,200ha of landbank in Sumatra for USD9.47m, or USD2,960/ha.

According to a research note from RHB, this brings its total planted landbank to 486,275ha. It also noted that based on its understanding, the group only has less than 20,000ha of land left to plant and should therefore continue to be on the lookout for more planted landbank in order to expand and diversify its landbank further.

RHB believes that its more geographically diversified landbank (58% Kalimantan, 38% Sumatra and 4% others) would bode well for it in times of extreme climate conditions, given that the differing areas are likely to be affected differently at differing periods.

Further, excluding the deferred tax income recognised in FY16, RHB projects Golden Agri to post an admirable more than 100% jump in core net profit in 2017, on the back of: A significant recovery in FFB output of 12% YoY (albeit slightly lower than management’s target of 15-20%); continued improvement in margins in its palm and laurics division on the back of higher prices and increased cost efficiencies; and more consistent profits at its oilseeds division, given the current higher soybean prices.