Is it the light at end of tunnel or another false dawn in the making for Golden Agri share price? As a palm oil plantation owner based in Indonesia, Golden Agri share price destiny is closely intertwined with the crude palm oil (CPO) price, which has collapsed for the past few years. Recent resurgent in CPO led many investors to believe that recovery of Golden Agri share price is on the way. But is this really the case or is it a bobby trap awaiting investors?
To put things into perspective, the only predictability of Golden Agri share price is its unpredictability. Against the backdrop of declining commodity prices, Golden Agri share price had been pretty volatile in 2018. To make matter worse, Indonesia rupiah plunged in 2018 as a result of rising US dollar, roiling Golden Agri’s businesses in the process. The challenging operating environment led to Golden Agri to record its first annual losses in 10 years.
To rub salt into wound, arch rival Wilmar posted a net profit of USD1.27 billion for full-year FY2018. Given the wretched performance of Golden Agri, should investors run for their lives or keep faith with the management? In this article, I will share my insights on the growth prospect of this palm oil producer.
Golden Agri share price at cross-roads
Despite the woes and the collapse of Golden Agri share price (it was trading at $0.60 in 2014), what riled investors was the lack of share buybacks by the management for the past few years. The last share buyback was conducted in April 2015, which was almost four years ago. So for those who think that Golden Agri share price is currently undervalued, you might want to think twice before entering this counter (Net asset value stood at USD0.33, below the current trading price).
Somehow, the latest financial quarterly result might have heightened expectations for Golden Agri share price as Q4FY2018 saw a net profit of USD79 million, reversing a loss of USD29 million in Q4FY2017. The perceived “recovery” led to a minor surge in Golden Agri share price, which increased from $0.25 to $0.28 as of 5 March 2019. However, delving into the financial report, the data painted a different picture altogether.
On a year on year basis, Q4FY2018 reflected a plunge of 22% in operating profit to USD36.7 million. Revenue also collapsed 14% to USDUSD1.65 billion. However, net other operating income actually surged ten times to USD115 million. According to Golden Agri, the other operating income [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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