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Sunday, December 20, 2015

Major Plantation Companies ~ Price Earning Ratio Versus FCPO Price

It is quite easy to estimate the earning and thus the PER of plantation companies, assuming all other parameters remain the same except the FCPO price.

The interesting one is FGV, with the current FCPO at the level of RM2400, PER is very high, higher than 60 times. However, if the FCPO were to shoot up to RM3400 and beyond, FGV would become the cheapest company.

FGV's high sensitivity on FCPO price movement is due to its FFB production per market capitalisation is very much higher compare to other companies.This will also explain why FGV managed to get very high IPO price, as then the FCPO was high, higher than RM3000.

Will FCPO go up again to and beyond RM3000 in near future? Who know? So it is still safer to invest in BKAWAN.

Invest at your own risk.

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