Golden Agri is down 1.6% to$0.60 after reporting 3Q12 net profit fell 22% on-year to US$86 million ($105 million) on lower CPO prices and higher soybean costs.
The results were slightly below expectations, says Carey Wong, an analyst at OCBC, adding it was mainly due to inventory rising much more than expected again.
“They appear to have a slight inventory overhang issue,” he says. “The Street is definitely likely to adjust lower their earnings. Consensus earnings could probably still come down.” But he adds, “we don’t see CPO prices falling off the cliff. It’s probably not going to be as strong as the soybean price, but I don’t think we’re going to see very sudden drops.”
He notes the company is the second-largest plantation operator globally, making it more susceptible to CPO price changes. The $0.59 year-to-date low is likely to offer initial support.
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