Investors who hold palm oil stocks are seeing red and only red as their 3Q18 financial statement did not even live up to the expectation, but also lose all the profits. All top companies in the related field are facing the same situation – loss -. Whether Chumporn Palm Oil Industry Public Company Limited (CPI), United Palm Oil Industry Public Company Limited (UPOIC), Univanich Palm Oil Public Company Limited (UVAN), or Vichitbhan Palmoil Public Company Limited (VPO) are all shedding tears right now.
When it comes to this, it makes us wonder if palm oil stocks are still as attractive as they used to be?
The reason that eliminates all the profits from palm oil stocks is because the lower price of palm fruit and crude palm oil in 3Q has hit the lowest in a decade at ฿3.54/kg and ฿20.24/kg from ฿4.18/kg and ฿22.43/kg YoY, respectively.
When looking at the 3Q18 financial statements of these four companies, they seem to have the same problems.
The loss of CPI was due to the decrease in sales and services income by 19.31% to ฿940.12 million from ฿225.04 million YoY. Meanwhile, UPOIC also faced the same problem as its sales income decreased by ฿89 million or 43.6% YoY.
UVAN’s loss was from its five palm oil refinery plants that turned from ฿79.8 million of profit in 3Q17 to ฿34.6 million of loss in 3Q18. Its palm plantations also entered a low season in production along with the lower palm oil price that led to a ฿10.1 million of loss in 3Q18. As for VPO, the higher selling cost from ฿242 million to ฿270 million had erased VPO’s profit, but its deficit was lowered from ฿55 million to ฿42 million due to the increase of revenue from ฿222 million to ฿267 million.
Whoever has palm oil stocks in their portfolios needs to keep fingers crossed and hope that the 4Q18 financial statement would be better than the previous one.
To achieve a good looking 4Q financial statement, that means the palm oil price must edges higher. Nevertheless, due to the current circumstance that palm has been used as political tools, it is quite hard to tell the direction of where the price would go.