Dear friends of i3 Forum,
This evening we will post our reasons WHY PALM OIL UPSTREAM PLANTERS WILL BENEFIT MORE THAN DOWN STREAM PALM OIL COMPANIES WHEN CPO PRICES ARE HIGH.
Let us illustrate by these EXAMPLES
There was a time when Cost of Cpo production was Rm1,600 a metric ton. And Market price for CPO was Rm2,400 MT and a 5KG Cooking Oil cost Rm19.90
Above scenario tells us Pure Upstream planters (involve in FFB harvest ) will lose out to Down Stream Palm oil Companies that process FFB & CPO into Cooking Oil for sale
Why Upstream no good and down stream better when Cpo prices are low at Rm2,400 Per Metric Ton
OK Let us do a calculation
1. THE UPSTREAM PLANTERS LIKE JAYA TIASA, INNOPRISE PLANT, BPLANT, THPLANT, TSH RESOURCES, UTD PLANT AND MANY OTHERS ONLY PLANT AND HARVEST FFB (Fresh Fruit Branches) For Sale
Cost of Cpo Production Rm1600
Selling at Rm2,400
Profit is 2,400 minus Rm1,600 = Rm800
Rm800 divides by Cost Rm1,600
= 50% Gross Profit (Fertilizer, labour overhead not included)
2. THE DOWNSTREAM PALM OIL COMPANIES THAT PURCHASE FFB & PROCESS THEM INTO COOKING OIL AND OTHERS FOR SALE TO CONSUMERS LIKE YOU AND ME IN SUPERMARKETS, MINIMARTS & HYPER MARKETS
Their Cost of Purchase Rm2,400 Per Metric
Cost is Rm2.40 per litre (kg)
So in 5 Litre Plastic Bottle
it will be Rm2.40 cost X 5
= Rm12.00 for 5 Kg
And before MCO lock down they Sell a 5Kg Bottle cooking oil for Rm19.90
Now Sale is Rm19.90
Cost Rm12.00
Gross profit?
Rm19.90 less Rm12.00
= Rm7.90
Divide by Cost Rm12.00
So Rm7.90/Rm12.00
= 65% Gross profit
DO YOU "SEE" THE DIFFERENCE?
Planters gross profit = 50%
Processer into Cooking Oil gross profit = 65%
So from above we "SEE" that when prices of Palm oil is cheap companies like Wilmar, KLK, Batu Kawan, IOI CORP and others in Downstream are doing well. Those in upstream after deducting cost plus paying off bank loans are fairing less well
NOW SEE THE NEW SCENARIO WHEN CPO PRICES ARE HIGH LIKE NOW SEE
Created by calvintaneng | Aug 30, 2024
Created by calvintaneng | Aug 30, 2024
Created by calvintaneng | Aug 29, 2024
Created by calvintaneng | Aug 28, 2024
Created by calvintaneng | Aug 23, 2024
Created by calvintaneng | Aug 22, 2024
welcome
now see this
IF MKHOP IPO IS WORTH 62 SEN WITH P/E 20.3: THEN TSH RESOURCES WITH P/E 16.56 SHOULD BE RERATED FROM RM1.14 TO FAIR PRICE OF RM1.40, Calvin Tan
https://klse.i3investor.com/web/blog/detail/www.eaglevisioninvest.com/2024-04-24-story-h-182879779-IF_MKHOP_IPO_IS_WORTH_62_SEN_WITH_P_E_20_3_THEN_TSH_RESOURCES_WITH_P_E_
2024-04-24 18:27
calvintaneng
Blog: Reposted Article: OIL PALM STOCKS IN Bull Run Time: Those Prepared with Biggest Capacity Will Always Excel More Than Others, Calvin Tan
https://klse.i3investor.com/web/forum/forum-thread/600622097#google_vignette
2024-02-22 00:33