Towards Financial Freedom
Golden Agri Resource - BUY
- The company is raising almost US$400 mln (net of expenses) via a 5-year 2.5% convertible bond issue, with a conversion price set at 88.96 cents, ie 28% conversion premium.
- Given the company's ambitious program in the African continent, and where interest rates are, it is no surprise Golden Agri should want to raise capital.
- The issue is mildly positive for the range-bound stock (eg weakish palm oil prices have not been helpful):
a. the 561.11 mln new shares to be issued in the event of full conversion represent 4.4% of current issued capital of 12.84 bln shares.
b. based on the 1.84 cent dividend for 2011, yield on the stock is 2.6%.
- Largely because of the weak palm oil prices, Golden Agri's profit fell 40% in Q2 '12.
- We have a BUY on the stock.
Source: Lim & Tan Securities - 7 September 2012
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
