NOL: Reporting a loss.

NOL reported that it has made a loss due to increasing fuel prices and too much new capacity entering the market. Marine bunker fuel averaged US$600.02 per metric ton in the first quarter in Singapore trading compared with US$469.19 a year earlier, according to data compiled by Bloomberg.

Will things improve for NOL?

“Too much new capacity has entered the market this year,” said Jee Heon Seok, an analyst at NH Investment & Securities Co. in Seoul. “It should get better as we go into the peak season in the third quarter and fewer new ships enter service.” Source: The Edge.

Oil prices have come off their highs and are now under US$100 a barrel. Supply worries have eased. The spike in oil prices was probably due to speculative activities rather than a real increase in demand. As circumstances surrounding the supply of crude oil turn benign once more, it would benefit NOL and other transport companies, everything else remaining equal.

Technically, NOL's chart is spotting a positive divergence. There is a higher low on the MACD as price spotted a lower low. Volume has also reduced significantly over the last five sessions as price hugged the 20dMA for support.

I believe that there could be a knee jerk reaction to the news and we could see price decline to cover the gap at $1.86. Any further decline in price and we want to see support at $1.80 holding up.  If it does hold up, it might be a good opportunity to buy some.

Now, we know that Mr. Market has a perverse streak. Could not the price move up instead? Yes, why not? And the reason would be that things are not as bad as analysts had feared. I'm just guessing, of course. Then, expect immediate resistance in a band between $1.92 and $1.93, after which, there is the declining 50dMA at $1.95.

NOL reports first loss in year on fuel, cargo rates. Average revenue per box rose 3% in the period, trailing a 28% jump in fuel prices, as the introduction of more ships on Asia-Europe routes sapped rates.
Friday, 13 May 2011

© 2011 - The Edge Singapore

Golden Agriculture: Excellent results.

Golden Agriculture reported a sterling set of results as expected. My faith in the company was not misplaced and my expectations were met. Year on year, revenue increased 134% while net profit increased 161%. Quarter on quarter, net profit increased 47%.

I have mentioned before that I like how the company is expanding its downstream operations to be closer to consumers. I also like how it is expanding its business in China to diversify its customer base away from Indonesia. Its Chinese operations saw a year on year increase in net profit of 220% while its Indonesian operations saw a year on year increase in net profit of 159%.

However, it is clear that its Indonesian business is still the more profitable one as it has a gross profit margin of 43%, up from 33% a year ago, while its Chinese business has a gross profit margin of only 7%, up from 6% a year ago. Could gross profit margin of its business in China be improved further? I am hopeful that it would.

Golden Agriculture's share price formed a white spinning top in the last session on the back of increased volume. This could be in response to the company's excellent results which were announced mid-day. It is easy to see that immediate although weak resistance is at 67.5c. Stronger resistance is at 68.5c and if this were taken out, we could see 70.5c tested next. 70.5c is also where we find the declining 100dMA and the upper Bollinger band. So, I expect this to be a strong resistance.

We want to see 70.5c taken out convincingly and we want to see the price form a higher high. The last high was at 73.5c. If a lower high should be formed, we could see a head and shoulders pattern. That could be ominous.

See presentation slides here.

Golden Agri profit doubles to record on surge in palm oil. Net income rose to US$230.7 billion ($287 billion) for the quarter ended March 31 from US$88.5 million a year earlier.
Friday, 13 May 2011

© 2011 - The Edge Singapore