Golden Agri share price to lose shine after STI exit?

On 5 December, it was announced that Golden Agri share will be booted out of the prestigious Straits Times Index (STI). Taking over its place will be Mapletree Logistics Trust. With this latest development, I fear the worst for Golden Agri share price. In my previous article, I have mentioned that I am pretty bearish on Golden Agri share price in the medium term. This latest episode vindicated my point and also marked a sorry end to Golden Agri’s journey in the STI.

StarHub and SIAEC were booted out of STI in 2018 and 2017 respectively. Since then, the share prices of the two companies had plunged to abysmal levels. On this basis, I don’t see how Golden Agri share price can fight its destiny. Included in the STI since September 2008, Golden Agri share price had been in the limelight for the past decade and this counter enjoys much liquidity. The average three-month trading volume is actually 1.1 billion!

Since 2014, Golden Agri share price had plunged from $0.44 to the current $0.22, representing a massive decline of 50%. The huge fall of Golden Agri share price had caused much wealth destruction for shareholders. Thus, understandably, many shareholders must be unhappy over Golden Agri share price performance. It is important to note the performance of Golden Agri share price mirrored the business fundamentals – revenue fell from a high of USD7.62 billion to a low of USD7.1 billion. Profits also fell from USD117 million in 2014 to USD2 million in 2018.

Indeed, 2014 was a defining year for Golden Agri because of the drop in crude oil price, leading the crude palm oil (CPO) price to suffer a multi-years downward trend. To compound the matter, the 2015 haze had also caused Golden Agri to pour much resources in fire fighting and environmental sustainability efforts. Due to these challenging factors, Golden Agri share price had been depressed in recent years.

Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. Furthermore, I am not vested and have never invested in this counter before. Whether Golden Agri share price will surge or collapse has no impact on me. Thus, this article is not meant to induce readers to make any form of investment decisions.

Golden Agri share price gone with the wind?

Currently, Golden Agri share price is trading below its Net Asset Value (NAV) of USD0.32. As a growth stock, investors will always judge this counter on its revenue growth and not from the perspective of value investing. On this note, Golden Agri share price could be facing plenty of headwinds as revenue continued to be on the downward trend.

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