Yes, they have risen quite a bit but there is still upside. My picks for the sector are IndoAgri, Noble and Olam. Long shot will be Novo Group but if you are feeling lucky, it is worth a buy.
On the other hand, China Animal Healthcare is slowly slipping out of my grabs. I thought it would be affected by the credit tightening in PRC but it seems that this S-CHip is being propped up, most probably by those institutions which are inside it via placement.
Aren't Noble and Olam already very hyped up and trading at premium valuations? I don't think there's a margin of safety for either company, and their gearing is simply scary. In terms of Balance Sheet strength, their gearing is one big red flag. In terms of profitability, their net margins are too thin to be considered a likely candidate for value investment.
ReplyDeleteJust my thoughts, that if one were to go for commodities, perhaps one should look for a relatively less well-known company which had potential and is well-managed. Perhaps USA can offer such a company if Singapore cannot.
yeah... i think they are hyped up in terms of valuation.. but for a holding period of 1 year, they look good.
ReplyDeletei havent gone in depth to their balance sheet but right now, i dont see them facing the same problem like in the case of Ezra (which you have covered, ha).
the last i heard, Ezra's latest gains were propped up by forex differences..
I believe that the commodity plays still have legs in the bull. with the exception of Wilmar International, I think Golden Agri, Noble and IndoFood Agri still have upside, though in terms of business model the latter two are more viable long term.
That said, i agree with the observation that there is no "margin of safety" so to speak.