Golden Agri still struggles after soy prices plunged to 4-year low in September

Is the crash beginning to bottom out?

Golden Agri-Resources posted spectacularly disappointing results in the first half of the year. The agribusiness giant was further hit by the record-breaking plunge in soy prices in September, during which soy prices crashed to a four-year low.

According to OCBC, some good news may be in store for the firm as some of the negative news appears to be priced in, coupled with the fact that soy futures are finally making a modest rebound of 3%.

The company is also set to benefit from the fact that Malaysia has scrapped export taxes have for both September and October, while Indonesia removed it for October in an attempt to help boost exports.

“Having said that, we still see the need to reduce our FY14 CPO price assumption to US$760/ton (FY15 to US$800/ton), down around 3-5% as we see reduced risk of a impactful El Nino effect on production in 2014 (probably a bit more in 2015). This in turn reduces our FY14 revenue and earnings estimates by around 3%; also drops our fair value to S$0.48 (still based on same 13.5x blended EPS),” noted OCBC.

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