Golden Agri-Resources allots $500 million to asset-building

Its capex list includes purchasing more palm oil plantations, processing facilities and other logistics upgrades.

Golden Agri-resources justified the half-a-billion spending spree with expectations that palm oil demand and palm oil prices will remain strong worldwide.

Here's more from OCBC:

Going forward, GAR believes that the industry outlook remains resilient with robust demand growth for palm oil coming from both emerging and developed countries; prices are also likely to be supported by limited supply growth of other vegetable oils, especially soybean. GAR intends to focus on expanding both its upstream and downstream capabilities. Out of the projected US$500m capex, US$200m going to expand its palm oil plantation by 20-30k ha (both greenfield and via M&As). Another US$200m will be used to increase its downstream processing capacity in strategic locations, while the remaining US$100m will be used for infrastructure to extend its distribution coverage and logistic facilities to enhance its integrated operations.

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