Despite being hailed as the world largest listed rubber supply chain manager, Halcyon Agri is ironically seldom covered by stock analysts in Singapore. In recent years, the company had experienced quite a massive transformation that saw them being acquired by China big boy, Sinochem. As a result, total revenue rocketed from $635 million in FY2014 to an amazing $2.66 billion in FY2017. Nonetheless, Halcyon Agri share price suffered a serious loss of form recently. What on earth has happened?
In investing, the key to winning is investing in companies with top market positions because you would want to invest in companies with competitive advantages and investment moats. Halcyon Agri has certainly positioned itself well by becoming the biggest listed rubber supply chain manager. But this does not mean that this counter is low-risk. On the contrary, the volatility of Halcyon Agri share price had been giving investors plenty of sleepless nights in 2018.
As a commodity supply chain player, Halcyon Agri share price can be vulnerable to the volatility of commodity prices. What this means is that market timing is important. So, you must set appropriate entry and exit strategies to avoid losing your pants.
Profile of Halcyon Agri
Halcyon Agri’s business model is unique because it not only procures raw natural rubber from smallholders to feed their processing facilities, the company also owns about 122,000 hectares of rubber plantations in West Africa and Malaysia.
The production facilities in China, Malaysia and Thailand have a total production capacity of 1.63 million metric tonnes per annum. Overall, the Group owns 38 processing factories in most major rubber producing origins and produces sustainable natural rubber under its proprietary HEVEAPRO brand.
Apparently, Halcyon Agri’s impressive portfolio had attracted the attention of Sinochem International, a state-owned conglomerate from China. In 2016, Sinochem made a cash offer for Halcyon Agri and became its parent company with current stake amounting to 55%. In turn, Halcyon Agri acquired 100% of GMG Global Ltd and acquired all the natural rubber processing and distribution business of Sinochem International. With the backing of Sinochem, it seemed that Halcyon Agri share price is ready to rock the market. But the ensuing years proved otherwise.
Halcyon Agri share price flash in the pan?
From a high of $0.68, Halcyon Agri share price crashed to a stunning low of $0.37. The latest bout of correction came swiftly after investors punished this counter for delivering a set of poor financial results. Profits for 3QFY2018 amounted to USD 0.84 million, a whopping 90% decrease as compared to FY2017. For 9MFY2018, total losses stood at USD 4.7million. With such disastrous results, it is no wonder that Halcyon Agri share price went on a devastating downward spiral.
Has the game really changed for Halcyon Agri and should investors run for their lives? Make no mistake, Halcyon Agri share price had previously [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]
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