SIME DARBY PLANTATION BERHAD (5285:KL) pretax profit plunges on lower CPO prices

SIME DARBY PLANTATION BERHAD (5285:KL) pretax profit plunges on lower CPO prices

SIME DARBY PLANTATION BERHAD (5285:KL) pretax profit plunges on lower CPO prices

Sime Darby Plantation experienced a 64% decline in pretax profit to RM125 million for the first quarter of its 2019 financial year.

The sharp fall in profitability was attributable to lower average crude palm oil (CPO) and palm kernel prices.

CPO prices declined 18% year on year from RM2,452 to RM2,012 per metric tonne.

“The challenging business environment for the palm oil industry with prevailing low CPO and palm kernel prices as well as a volatile external environment influenced by the US-China trade war has continued to impact the industry’s performance,” Mohd Bakke Salleh, the company’s managing director, told reporters after the presenting the results.

He also said that external factors including the negative perception of the palm oil industry due to deforestation played a role in the decline of CPO prices.

The company is underaking an asset monetisation exercise for several parcels of land identified with potential for property development and government infrastructure programmes.

It hopes to raise RM1 billion in gross proceeds from the monetisation excercise by the end of the year.

Bakke also said the company was seeking to exit the palm oil business in Liberia.

He said Sime Darby Plantation was looking at a 50:50 mix for its upstream and downstream business.

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

By the way, prices are vulnerable to a correction towards 4.89.

The projected upper bound is: 4.84.

The projected lower bound is: 4.46.

The projected closing price is: 4.65.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 24 white candles and 21 black candles for a net of 3 white candles.

Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 41.8182. This is not an overbought or oversold reading. The last signal was a buy 11 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 39.58. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 5 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -18. This is not a topping or bottoming area. The last signal was a buy 5 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 0 period(s) ago.

Rex Takasugi – TD Profile

SIME DARBY PLANT closed unchanged at 4.660. Volume was 23% below average (neutral) and Bollinger Bands were 141% wider than normal.

Open High Low Close Volume___
4.610 4.740 4.610 4.660 2,375,600

Technical Outlook
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 4.65 4.97 5.05
Volatility: 35 25 32
Volume: 6,683,620 3,245,400 3,334,617

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

SIME DARBY PLANT is currently 7.7% below its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of SIPL.KL at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on SIPL.KL and have had this outlook for the last 15 periods. Our momentum oscillator has set a new 14-period high while the security price has not. This is a bullish divergence.

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