FGV: Nation's best bet on CPO

25 мая 2020 г.

Earlier last month I shared on RSAWIT, one of my favorite counter that gave me 100% return last year. The fact that the plantation business are mostly depending on commodity price (in this case CPO), you can't deny to also look at how is the FCPO going now.

The good thing at this point of time is that FCPO has already broke the downtrendline signalling for an uptrend move!

Now lets look at FGV. Felda Global Ventures.

Quick facts:
- FGV is one of the world's largest producers of crude palm oil accounting for about 15% of Malaysia's total annual production CPO.
- Malaysia's CPO export to worldwide majority to India (30%), China (18%) and Pakistan (10%)
- 3 core business sectors of FGV includes Plantation, Sugar and Logistics.
- Our crude palm oil also contribute to healthcare as it is one of the main substance to soap.

Few recent news and its implication:
- Q4 2019: CPO gain its momentum and went to 3k
- Jan 6, 2020: FGV units to explore investment in Pakistan Port: up to 25% stake in Fauji Akbar Portia Marine Terminals Ltd (FAP). This is good especially Pakistan is our 3rd biggest importer of CPO. We have more control to the port.
- Jan 13, 2020: India urges boycott of Malaysian palm oil after diplomatic row. Resultant to that, FCPO drops to now. Note that India is our major CPO importer.
- 10 May 2020: rumor that India will buy back our CPO. Its just a rumor... but most plantation counters were already make a move.
- 19 May 2020: India announce will continue to buy our CPO. That means only one.. UP!
- 22 May 2020: Statement from MPOB indicating that CPO will further move up. This will obviously impacting the revenue of plantation counters. OPPORTUNITY!
- CPO potentially will be traded at RM2.3k-2.4k in a few month. This is due to good malaysia-india diplomatic relation thanks for TSMY.

So all the good news, let's look at the fundamental indicator of FGV
- EPS: NEGATIVE
- PE Ratio: NEGATIVE
- ROE: NEGATIVE
- NTA: 1.15 (OK)

In summary, quite bad performance based on fundamental indicator. Note that FGV is the leader of plantation sector. So you can expect the same for most of the plantation players.

Why does this matter?
WHEN IT COMES TO NOT SO GOOD COMPANY FUNDAMENTALLY, MAKE SURE TO NOT INVEST LONG TERM. JUST TRADE SHORT TERM. It moves up fast, and might move down fast too!

Note that when I say "bad" its purely just an indicator based on 5 Magic Numbers. None of that relates to the actual value of FGV.

Feel free to view the other plantation companies listed below: