This is a short post.
I believed Golden Agri has fallen to a price where it might be a good idea to pay more attention to it.
This is because:
1) They are reviewing their China business model, which is really a drag on their otherwise stable (although cyclical) business. If they sold it off, it might provide a short term catalyst. It is reported in their presentation and also in the edge.
2) Finally, Capex is tapering off. I was wondering why are they so aggressive in capex when the market is cool.
2009: 200 mio
2010: 400 mio
2011: 450 mio
2012: 500 mio
2013: 550 mio
2014: 550 mio
2015: 300 mio
Golden agri is behaving like a aggressive growth stock, but apparently, market is not giving it a growth stock valuation, it might be a better idea for it to increase dividends but improving FCF but managing capex and cutting the failing China Venture.
3) Cash buyback finally.
1,283,754,855 shares bought at about 41cents. 41 cents is not bottom price for recent time.
4) In the longer term, we are wait for the CPO price to turn, which is going to the dogs for years. Although the low crude price will affect bio-diesel demand, the bulk of CPO demand is still as a edible oil, and a processor for other food.
1) The longer term demand of CPO as a vegetable oil. Look at the supermarket shelves.
2) Many substitutes, and their price is getting lower too, Canola oil etc.
Your money, my 2 cents break from my work, and a substitute to snacking for stress relief.
So follow at your peril.