Golden Agri-Resources

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Golden Agri reached 52 week low on disappointing results. 2015 seems yet to be another challenging year but long term investors can accumulate on value at 0.5 PB currently.
to reply a fellow vb:
I must first say that I have not read GAR or KA for some time. Everything I write will be on "IIRC" basis. I calculated 41cents in 2013/14 and bought 1000 units of GAR to test my thesis in around 2015. GAR dropped to below 30cents and only recently back to >40 cents. Don't treat me as a palm insider please!

I think I was misleading. It should be "golden agri not affected -immediately & completely- by increasing of CPO prices. GAR calculates it's biological asset using 3 years average price of cpo.
Now think about how price momentum of CPO affects the biological asset of GAR.

My investment thesis in 2013/14, execute in 2015:

I calculated to find the price per hectare of palm plantation land. I used [(market price)*shares+total debt)-(biological asset)]/[planted area] to find "how much am I paying for a hectare of palm plantation land".
I also used {[(Total planted land)*(CPO produced/ha)]*USD 350}/(number of shares) to calculate a "what value an hectare of land produce when CPO drop to USD350".

1) At 41cents, GAR is selling at about MYR 26k per acre. FFB in the land and all other management/corp functions such as logistics, marketing/distribution channel comes free. This was cheaper than buying an acre of land in Malaysia, using data from internet search. (FLAW: Land of agricultural land in Malaysia is very different vs in Indonesia. Even in the same country, an acre of land differ by a lot).
However, when I think about it, MYR 26k per acre of palm plantation + management, it's quite cheap.

2) At 41 cents, if CPO is priced at USD 350, I could breakeven in 6 year. The Price/(earnings by selling CPO at USD 350) was about 6.

I also think that for commodities company the most dangerous thing to do is buy at low PE. PB about 0.5 and PE >30 (the higher the better) would be my buy signal for trading position.
Found the spread sheet and put in the 1st Mar figures. At SGD 43 cents per share:

Debt adjusted price per hectare of planted area:
~ SGD 8,900 or ~MYR 26,000 per hectare; or ~MYR 10,500 per acre.
Calculation: [share*(price/share)-(nonbiological asset)+(total debt)]/(planted area)

Debt adjusted price per hectare of planted area, disregard asset:
~SGD 27,000 or ~ MYR 79,000 per hectare; or ~MYR 32,000 per acre
Calculation: [share*(price/share)+(total debt)]/(planted area)

Assuming USD500/mt CPO, 5.4 MT/hectare: Total planted area would produce a sales of USD 0.1 per share.
At SGD 0.43 per share, the price/sales would 3.19.

The previous price/sales should be 4.8 instead of 6. The mistake was (SGD price/ USD sales).
Based on this, at current SGD 0.43, GAR is selling cheaper vs when I bought at 0.41Sad
An Interested Person Transaction.

Transfer of Property Units in Sinarmas MSIG Tower, Jakarta, Indonesia

Golden Agri-Resources Ltd announced that its wholly-owned subsidiary, PT Purimas Sasmita (“Transferor”), has entered into binding agreements with PT Duta Cakra Pesona (“Transferee”) where the Transferor has agreed to transfer all its rights and obligations in the property units of a total area of 36,874.49 square meters located on 23 floors of the office building at Jalan Jenderal Sudirman Kavling 21, Setiabudi Sub-district, South Jakarta, Indonesia known as Sinarmas MSIG Tower, to the Transferee, for a total net cash consideration of IDR1,408,965,000,000 (equivalent to USD107,500,000).

More details in
Specuvestor: Asset - Business - Structure.
14 May 2020 Golden Agri 1Q20 update
(click for sgx)

Rev $1,657m up 2% yoy
GP $198m up 3%
NP -$95m 

1. GAR’s business is in the food and biodiesel industries, which are deemed essential by the government and allowed to continue to operate. GAR also continues to be a preferred supplier due to its status as one of the main global players and leading position in sustainability. We believe that GAR’s remote locations of its operational facilities that are spread over a large geographical space mitigates some of the operational risks.

2. COVID-19 has caused a sudden change in consumption patterns. The closure of hotels, restaurants and cafés (Horeca) has reduced the consumption of vegetable oils including palm oil. This reduction is partially offset by increasing household consumption. The staple food demand ensures the viability of our operations and the supply and demand balance remains healthy. On the biodiesel side, the Indonesian government remains firmly committed to the B30 mandate. 

In our view the CPO price is buffered from the decline in crude oil price because of staple demand for food usage, as history has repeatedly shown. Although short-term volatility is expected with the current uncertainties of the COVID-19 outbreak, we believe the CPO price will recover once the pandemic subsides and inventories in consuming countries are replenished. The limited growth in palm oil supply this year affected by the drought conditions and lower fertiliser application by small players in 2019 will keep the supply and
demand balance healthy. Long-term fundamentals of the industry remain in place as palm oil is the most consumed vegetable oil with its high versatility and lowest cost of production.

Stay home and stay safe everyone.
1H Result as at 30 Jun 2020
Rev       USD3b (vs 3b)
GP      USD388m (vs 344m)
Net Loss USD11m (vs 15m)

The COVID-19 pandemic has created uncertainty and affected the global business sentiments and operating environment. Nonetheless, the outlook of CPO prices remains stable as production growth is expected to slow down given the industry replanting, drought conditions and lower fertiliser application by small players in 2019, while the demand for CPO is estimated to remain stable due to staple demand for food usage.

Stay home and stay healthy, everyone.

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