Asiatic Development's Earnings To Support Future Investments

Palm Oil HQ Posted by Palm Oil HQ 36 days ago
Source: http://www.theedgedaily.com
Added 36 days ago - SHARES of Asiatic Development Bhd (RM6) took a tumble in recent days on the back of a fall in crude palm oil (CPO) prices. The benchmark CPO futures contracts fell below RM3,300 per tonne.

Prices for edible oils were under pressure after crude oil prices dropped sharply on the back of worries of slowing demand. Nevertheless, with consumption demand still on the rise, tight inventory levels and probability of more weather-related supply disruptions, the market for food commodities should stay relatively robust by historical standards, if off record high levels.

Similarly, Asiatic is expected to report good earnings in the next few years. Net profit is estimated to expand by some 36% year-on-year (y-o-y) to RM470 million in 2008. Going forward, lower average CPO prices assumption of RM2,800 per tonne translates into lower earnings of RM375 million and RM384 million, respectively for 2009-2010. But these are still well ahead of the company’s earnings in previous years. Its shares are trading at pretty decent valuations of 9.7 and 12.1 times our estimated 2008-2009 earnings, respectively.

Stronger balance sheet - leverage for expansion
The relatively robust earnings will further strengthen Asiatic’s balance sheet. The company’s cash pile increased from RM261.4 million at end-2006 to RM495.1 million at end-2007 and RM524.3 million at end-1Q08. This is expected to increase further in the foreseeable future.

Its burgeoning coffers will support the company’s ambitious expansion plans for sustained longer-term growth. Asiatic plans to increase its current 65,500ha of plantation landbank in Malaysia by acquiring up to 143,000ha of land in Kalimantan, Indonesia under two joint-venture projects.

Some 98,300ha of land are to be acquired under the first 70:30 venture with Indonesian-based Sepanjang group. So far, the company has completed the acquisition of the first of five contiguous parcels with an area of 14,261ha, of which about 3,000ha have been planted as at end-May. The remaining area should be planted by 2009.

Most recently, Asiatic formed the second venture to acquire some 45,000ha of land, of which about 12,500ha have been granted location permit to clear and plant oil palm. It is in the process of securing permits for two other parcels of land totalling some 32,500ha.

The company is on the lookout to acquire more landbank and targets to plant up 6,000-10,000ha annually in total.

Full Article from Source
Forward this article to a friend  

Latest Crude Palm Oil (CPO) Futures Prices (Hourly)

The Chart and table below show the latest Crude Palm Oil (CPO) Futures prices, as traded on the Bursa Malaysia Derivitives Exchange.


First trading session: Weekdays 10:30 a.m. to 12:30 p.m
Second trading session: Weekdays 3:00 p.m. to 6:00 p.m
Current Malaysian local time: 12:10:55 PM Thu, August 28th 2008

Palm Oil HQ Crude Palm Oil Futures Prices
1 USD = 3.3818 MYR Updated: 12:00:03 PM Thu, August 28th 2008
Month Open High Low Last Sett.p Change Volume O.P
Sep 20082,4372,4412,4372,4412,480-39131,466
Oct 20082,4622,4802,4622,4802,501-219512,503
Nov 20082,4622,4882,4522,4882,502-1467115,251
Dec 20082,4662,4902,4632,4902,504-14868,848
Feb 2009----2,518--572
Mar 2009-2,4652,520-2,189--0
0.00---2,50002,668-0
Jul 2009----2,511--2,374
Sep 2009---2,5510984-0
Nov 2009----2,507--424
Jan 2010----2,505--886
Mar 2010----2,503--219
May 2010----2,503--1,114
Jul 2010----2,503--36

Historical Crude Palm Oil (CPO) Futures Prices

Average Historical Spot Settlement Price for Crude Palm Oil on the Bursa Malaysia Derivitives Exchange.

Palm Oil HQ Historical Crude Palm Oil Futures Prices