Brokers' take: RHB raises Golden Agri-Resources target price to S$0.315

RHB maintained its "neutral" call on Golden Agri-Resources but raised its target price on the stock to S$0.315 from S$0.26 in a research report on Wednesday (Mar 2).

This comes after Golden Agri posted its earnings on Tuesday, reporting a 71.2 per cent rise in net profit to US$323 million for H2 FY2021, which RHB said was in line with its full-year estimates.

The research team believes that earnings should remain "relatively robust" in FY2022 and thinks that valuations are fair at the current juncture as Golden Agri is trading within its peer range of 6 to 9 times price-to-earnings ratio for FY2022.

To reflect the higher expected crude palm oil prices, RHB increased its forecasts by 13-29 per cent for FY2022-23.

RHB added that its growth projections for nucleus fresh fruit bunches production in FY2022-23 is kept at 3-5 per cent. The research team also expects Golden Agri to book unit costs of palm oil that are about 10-15 per cent higher in FY2022.

The research team keeps its downstream sales volume growth assumption of 3 per cent year on year for FY2022-23 and its earnings before interest and taxes margin assumption of 3-4 per cent.