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Movement In The Short Term To Decide Golden Agri’s Direction
Tradeable, Tradeable Ideas | 06 June 2014
Related stocks:
E5H
By: Lim Si Jie
Articles (169) Profile
  1. Comparing its annual report for the past few years, Golden Agri has had a positive year in FY 2013.
  2. Golden Agri’s latest proposed dividend pay-out is 35 percent of profit, higher than its usual dividend pay-out ratio
  3. A double top has formed. The next trend depends on whether resistance is broken or formation of triple top.

Company Profile & Business Model

Golden Agri-Resources Ltd is the world’s second largest palm oil plantation company. It has integrated operations focused on the production of palm-based edible oil and fat.

In Indonesia, its primary activities include cultivating and harvesting of oil palm trees; processing of fresh fruit bunch into crude palm oil (“CPO”) and palm kernel; and refining CPO into value-added products such as cooking oil, margarine and shortening.

It also has integrated operations in China including a deep-sea port, oilseeds crushing plants, production capabilities for refined edible oil products as well as other food products such as noodles.

Corporate Developments
Golden Agri established a US$1,500,000,000 multicurrency medium term note via its subsidiary, Golden Assets International Investment Pte. Ltd. The net proceeds arising from the issue of Notes after deducting issue expenses will be used for general corporate purposes and working capital needs of the Group including repayment of outstanding borrowings.

Other than the medium term note offering, Golden Agri also announced its 2013 financial statements. The statement highlighted the positive year which Golden Agri had in 2013.

Closer Look At Its Dividend Distribution

Golden Agri is proposing a distribution of $0.0011 for the year of 2013. This is in consideration of Golden Agri’s strong balance sheet as well as commitment to consistently reward its shareholders. The past few years of dividend pay-out have been at 30 percent of underlying profit.

However, Golden Agri’s latest proposed dividend payout is 35 percent of profit despite a slight drop in profit in 2013. This portrays a clear sign of confidence that Golden Agri’s management believes that they are able to achieve better results in 2014.

Chart Movements
Shares in Golden Agri-Resources is now currently consolidating in between $0.56 and $0.61 region.

The overall movement of Golden Agri would continue sideways first as it consolidates before breaking upwards to continue in its uptrend. But the $0.61 resistance level would have to be broken first before Golden Agri can continue in its upward trend.

RSI and stochastic both signal that share price is likely to turn upwards as it bounces off oversold levels. The $0.59 level is like a divider whether share price will transit into an uptrend or downtrend. If price sits above $0.59 and breaks $0.615, an uptrend is imminent.

However, we can vaguely see a classic double top formation at $0.615. If Golden Agri breaks through $0.56, we would see a short term downtrend. There might be a possibility that Golden Agri bounce off $0.56 too. If that happens, Golden Agri needs to break $0.615 or else it would be a classic triple top.

#Bull In The Making

With strong signals from fundamentals, I am positive that Golden Agri is a possible investment in the long run.. A good point to take profit is when current share price reaches its NAV per share ($0.85). However, in the short term, Golden Agri is currently at a crossroad and there is currently no visible opportunity to enter.

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Si Jie is no stranger to investing having started his journey at a young age. He is heavily influenced by acclaimed investors such as Benjamin Graham, Peter Lynch, and John Rothchild.

Please click here for more information about this author.

Golden Agri-Resources  0.285 +0.005 +1.79%   
Business: Co is engaged in cultivating & harvesting oil palm trees, processing fresh fruit bunches (FFB) into crude palm oil (CPO) & palm kernel (PK), & refining CPO into industrial & consumer pdts.

Insight: May-19, 1Q19 revenue fell 11% due to softer crude ... Read More


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