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Golden Agriculture: Full year results.

Thursday, February 25, 2010

Golden Agriculture released its full year results today.  Compared to the previous financial year, gross profit is down 42% and EBITDA is down 33%.  However, quarter on quarter, its gross profit improved 78% and EBITDA improved 236%.  This is a strong sign that the business is improving strongly.

Its balance sheet is very strong with low gearing.  Nett debt to equity ratio at the end of 2009 was 0.06x and nett debt to total assets ratio for the same period was 0.04x.  Total equity attributable to equity holders was up 18% to US$5,438m.

A dividend of 0.495c per share has been declared.

Golden Agriculture remains the least expensive of all CPO counters listed in Singapore.  It is also the most levered to the price of CPO and with expectations for the price of CPO to continue appreciating over the next two years, Golden Agriculture is likely to do better as well.

The following is taken from the presentation:

Optimistic Outlook for 2010

• Resilient growth in edible oil demand, especially for palm oil
Growing popularity as edible oil in developed and emerging markets
Increasing demand for substitute and alternative uses such as oleochemicals and biodiesel

• The Company is benefiting from the solid industry outlook
Sustained and best-in-class leadership in plantation growth
Actively exploring acquisition opportunities in upstream and downstream
Solid financial position with low gearing and strong cash flows

For the full presentation, please visit:
Golden Agriculture: Year ended 31 Dec 2009


Anonymous said...


thank you for posting the analysis. am still trying hard. hope to reach your standard one day..


AK71 said...

Hi Koori,

You are very kind, as usual. I know you are improving yourself taking courses and I feel that you will be more qualified than me one day. :)

I was actually a bit lazy with the above analysis. I spent a lot more time doing the updated valuation for Healthway Medical on 24 Feb. I will say a bit more about Golden Agriculture while I'm at this.

Golden Agriculture is a company I have liked for some time now as it is one of those cyclicals which would benefit from the global economic recovery which would mean a greater demand for crude oil which would impact the demand for crude palm oil (CPO) positively.

Apart from cheaper valuations when compared to peers such as Wilmar and IndoAgri, Golden Agriculture is almost a pure CPO company which would give it the greatest lift in earnings as CPO price improves. This, however, also means greater volatility.

This is why of the three stocks I have identified for active monitoring (Three portfolios and three counters: Future gains and passive income), I put Golden Agriculture under cyclical. It is not growing in a defensive industry like Healthway Medical. Demand for its products is not relatively inelastic which is the case with Saizen REIT. There is money to be made here but if circumstances change, we have to trim our sails very quickly.

It is good to hear from you again. Please come back often. :)

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