Golden Agri-Res    Last:0.25    +0.01

Placement of share

Go to their website to take a look at some financial figures and ratios. Most of the figures and ratios are quite alright. Good revenue growth, operating profit growth and net profit growth for a period of four years. High net profit margin around 40% range. Reasonable EPS growth and fairly consistent ROE around 20% to 30% for four years. Current assests to current liabilities ratio has been around 1.2 range for four years  (which means the company does not have large amounts of short-term debts in any one year and can likely clear short term liabilities in any year). Total assests to total liabilities is at healthy ratio of around 4:1 meaning worst case scenario should the company falters and resolves, it still has more than enough total assests to cover their total liabilities and still likely have cash to return to shareholders.

This is the world's second largest oil palm plantation. GAR owns, operate and manage oil palm plantations, mills, and refineries, as well as facilities for the manufacture of end user products from crude palm oil and palm kernel. This integration of business and economies of scale of operations may not be that bad for a commodity business since they may have a large market share of business to price their products for good profits margin. 

The above figures and ratios are only for a short period of four years and may not be indicative of the long term economics of the business. The recent rights issue will also dilute shareholders' earnings in the company. Investors are advised to have own judgement call. This is also not an inducement to buy or sell GAR's shares.

 

Previously own some, bought and sold a few rounds. I am too busy to monitor this stock. Not sure, so won't invest in it is the best policy.

 

I'd posted this in a separate thread :

 

Look at their financial standing as of end 31 Mar :

- cash/cash equivalent : $127m

- loan repayment within 1 year or on demand : $300m

==> immediate 1 year liability > cash



In Q1 itself,

- proceeds from short term and long term borrowing : $147m

- repayment for short term and long term borrowing : $140m

==> they are borrowing more than loan repayment Without this extra borrowing, the net decrease in cash for Q1 would be >$10m

 

Rights and warrants are just ways to raise cash. Having warrants encourage investors to get the rights issue so that they can get the warrants too. However, if one looks at this whole issue in simple sense, the company is just trying to rasie more cash and more cash (first from the rights issue and then from the warrants). Investors are urged to find out why a company wants to raise cash. If the cash raised is for good reasons to grow the company, then it makes sense for investors to invest more into the company since the company is expanding their business. However, if the cash raised is just to repay large amounts of debts for a cash hungry business with low retained earnings that cannot even support the business, then the rights issue may be a strong signal telling investors so.

Investigate carefully the reasons why a company raises cash. Rights issue may be the time for investors to take a closer look at what the company has been doing thus far and why they need to raise the cash. Ideally, an excellent business rarely raises cash and dilute shareholder's earnings per share (EPS) and returns on equity (ROE). Their net earnings from the business is high and debts and liabilities is low. The company has high amounts of retained earnings to invest back into the business and rarely need to raise large amounts of cash from loans or equity (rights issue/ warrants).

 

This counter is a mind game. Vol very high due to very large float in the market.

 

where are the shortlists?

What is the exercise dates for the warrants? Say if i buy it today, am i eligible for the warrants and rights?

 

oinkoink1999, to sell as normal share, you need to convert the warrant. The conversion is 0.54 cent. For GAR, you need to subscribe the right issue to get the warrant. Say you subscribe 5 right, they give you 2 warrant foc. 

 

Too many shares in the market. The company recent financial report, net profit drop alot.. 

 

hi orpehkong..am i correct to say that before warrants expire..i can trade them like normal shares? upon expiry, i will have to pay a conversion amt stated in the conditions..

thanks..

orpehkong      ( Date: 27-May-2009 14:25) Posted: Warrant mean after certain year, you need to convert to share and pay the amount fixed. If the share is lower than the warrant price at the point of maturity, nobody will convert and make a loss. If the share price is higher than warrant, then whoever hold the warrant will convert and sell the share and make a profit.

 

Shorting start liao.

 

Warrant mean after certain year, you need to convert to share and pay the amount fixed. If the share is lower than the warrant price at the point of maturity, nobody will convert and make a loss. If the share price is higher than warrant, then whoever hold the warrant will convert and sell the share and make a profit. 

 

Good potential. I also long long

 

Hi Guys, can anyone kindly explain what is a "Warrants" ? Thanks

 

me long.

 

Time to short this counter.

 

http://info.sgx.com/webcoranncatth.nsf/VwAttachments/Att_32475C15AB4F5525482575C30018CC61/$file/GAR18-27-5-09-RightIssue-PressRelease.pdf?openelement

Say you have 10,000 shares, you will get 1700 rights and 5,000 warrants.

The right is at 18 cents. Warrant to convert to share after 3 years, each share conversion is 54 cents

The share price will drop, too many share in the market.