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New Britain Palm Oil - Shares oversold on 2012 PE of 8.6

November 2011

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

  • Epic Code:
  • NBPO
  • Price:
  • 800p
Although the shares have retraced in line with the weak market, New Britain released sparkling interims, with the highlight being a three-fold increase in underlying pretax profit to US$149.8m on revenue that doubled to US$404m. This came thanks to a perfect storm of a 36% rise in production to 1,295,230 tonnes of fresh fruit bunches alongside a 42% increase in average crude palm oil prices to US$1,122 / tonne. Gross margins rose from 45% to 50% while cash holdings increased from US$2.7m to US$115.9m. It also has total borrowings of US$301m.The company has now sold forward 85% of expected full year production at US$1,082, which looks decent business as the spot price has fallen to US$1,000, reflecting worries over euro debt crisis ...

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