Blue chip with PE of a penny - Golden Agri

relaxing
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10 years 11 months ago #14506 by relaxing

Replied by relaxing on topic Blue chip with PE of a penny - Golden Agri

Greenrookie – Why palm oil companies ? Now you have to predict palm oil price on top of the usual monitoring of how well the company is managed. Seems too hard ?

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greenrookie
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10 years 11 months ago - 10 years 11 months ago #14511 by greenrookie

Replied by greenrookie on topic Blue chip with PE of a penny - Golden Agri

Hi relaxing,

I am not predicting CPO trend, although I keep abreast of the news and predictions by other analysts. With CPO at 40 percent lower the last peak, I believe there is a limit where it can go. In the long run, inflation, population growth, supply constraints will ensure the longer term price direction is up. I have set aside funds to accumulate when price goes down. How much further can it go?? If u look at 10 years av, the CPO is 600 plus. There is another 15% fall, I accumulate further. If it breaks below 10 years av, I buy again, I am sure I will hit the bottom soon.

With data stretching back 35 years, CPO never fail to break new high after a trough. Can u imagine the potential profits if 1 is patient enough? Golden Agri is the second largest plantation grower in the world, has Teck record of surviving crisis, it is lowly geared, and has a integrated operations, although the downstream operations are not strong.

I am buying a unpopular large company but I believe the tide will turn sooner or later. I cannot imagine the demense of CPO market, and that it will be around for a long time. I not sure how long it will take, but the tide will turn sooner or later.

That is my stragey, accumulating big strong out of favor companies on weakness and wait for light and dawn. Actually, if dawn comes too soon, my profits will be small because my holdings will be small. But I kiasi, if small profits is what I get for accounting for risk, so be it

Just my plan, rather simple and naive when compared to what observer 3 and tactician have, but I will stick to it until it proved unworkable.

Cheers

Last edit: 10 years 11 months ago by greenrookie.

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relaxing
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10 years 11 months ago #14514 by relaxing

Replied by relaxing on topic Blue chip with PE of a penny - Golden Agri

Seems like a lot of work. Only plantation stock I ever owned was IOI Corp as I used to be active in Bursa before CLOB demise. Have lost touch now . Anyway, good luck.

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greenrookie
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10 years 10 months ago #14679 by greenrookie

Replied by greenrookie on topic Blue chip with PE of a penny - Golden Agri

info.sgx.com/webcoranncatth.nsf/VwAttach...licy.pdf?openelement

An announcement I am anxiously waiting,luckily golden agri has confirmed that no hot spots happen in its concession areas, YET...

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niadmin
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10 years 9 months ago #15414 by niadmin

Replied by niadmin on topic Blue chip with PE of a penny - Golden Agri

CREDIT SUISSE, 29 JULY 2013:

We are bearish on palm oil prices for the remainder of
2013, and have cut our palm oil price assumptions to RM2,300 for 2013 (from RM2,600) and RM2,600 for 2014 (from RM2,800). As such, we have cut GGR’s FY13 and FY14 earnings forecasts by 22% and 15%, respectively.

Its target price has been lowered to S$0.67 from SG$0.80.

GGR remains one of the most leveraged plantation companies to palm oil prices—for every RM100/t decrease in palm oil prices, its earnings would fall by 8%.

Therefore, it works both ways—when palm oil prices eventually improve, GGR's share price should be quick to react positively.

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greenrookie
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10 years 9 months ago #15481 by greenrookie

Replied by greenrookie on topic Blue chip with PE of a penny - Golden Agri

Lower CPO price is always a convenient excuse for poor results, but for this case CPO price is just a scapegoat.

Compared QoQ, CPO price is more of less the same, but GP margin for indonesia operation fallen from 30% to 20%! 10% drop!

Main reason is the fall in yield, production fall 11%, coupled that with high inflation and costs of fertillizers and etc, the results is as above.

Hopefully Q3 margin will improve since management believe production will improve in coming quarters.

As for China operations, although volatile and still challenging,
GP and NP margins have improved 6 to 7% and 1.9 to 3.6% repectively. Although rev drop 5%.

Q3 av. CPO price(July CPO is bad, and demand will remain weak after ramandan) is worse, so I expect worse profits in 2H.

(Vested)

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