SINGAPORE (Nov 16): OCBC Investment Research is keeping its “hold” recommendation on Golden Agri-Resources, and raising its fair value estimate slightly to 37 cents, from 34 cents previously.

Golden Agri on Monday reported 3Q16 earnings of US$219.7 million (S$311 million), compared to a net loss of US$16.4 million in the same quarter last year.

Revenue in 3Q increased up 16.6% y-o-y to US$1.8 billion.

In a report on Tuesday, OCBC lead analyst Jodie Foo says Golden Agri’s swing back to the black was largely due to “a boost from the deferred tax income arising from the increase in tax depreciable value of its plantation assets”.

While Golden Agri will continue to see such tax benefits in the fourth quarter following government approvals, Foo says this is a one-off item and will not be repeated in FY17.

Golden Agri notes that there has been improvement in its crude palm oil production so far in 4Q, but maintains its expectations for a 15-20% decline in full year production.

However, Foo believes there might be a “possible recovery” for CPO production next year.

“Production may possibly get back to levels seen in 2015,” she adds.

As at 4.01pm, Golden Agri is trading flat at 38.5 cents.