Sunday, 1 February 2015

Bright spot in commodities?

In the invest section of the Sunday Times today, the reporter wrote about how one can invest in the different type of commodities and where to find the bright spot. Apart from what was mentioned, locally there are few counters which is commodities related, such as Noble group, Golden Agri and Wilmar International. Here I will share my simple view of one of these counter in this post, and why I bought into the counter.

Wilmar International is a leading commodities company listed in SGX, with business including oil palm cultivation, oilseed crushing, edible oil refining, sugar refining, fertiliser and grain processing. Below shows the FA ratio from the recent years, nothing exciting but they look pretty decent.
How about comparing these ratio against it's peer. Below is the comparison with it's peers, this was extracted from It is trading close to it's book value and PE is definitely not high.
Having looked at the FA, it is also important to check out the TA. Below is the chart for Wilmar, one would noticed that a very strong support has formed with the second test since mid of 2013. It has also been trending up with the daily 50MA above the 200MA, which most TA folks use it to determine a change in trend. One thing that is still lacking is the volume though, will we be seeing this soon? 
From the FA perspective, at this price it is not heavily discounted. However, from TA, the downside risk is limited, thus I only took a very small bite.


Rolf Suey said...

Hi Oldman,

Look pretty decent. Long term future of commodities is without question as population continues to grow. Worldwide, there is a shortage of farmers. As per Jim Rogers put it better to learn driving a tractor now and then drive lambo in the future.

Oldman said...

Hi, not sure if world population will grow at same pace as population move up to middle class, their thinking change. Jim Rogers has been saying that for few years now, importantly, we don't buy at high when he first started sharing this back then :)