GMG Global

Re: GMG Global

Postby grandmaster89 » Wed Jan 13, 2010 2:42 am

Hehe might explain their 96% drop in net profit ytd !!!

Hmm perhaps Noble Group should expand into rubber and uranium :)
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Re: GMG Global

Postby millionairemind » Tue Apr 06, 2010 8:59 am

This one should fly...

Published April 6, 2010

GMG Global: a Wilmar in the making?

By VEN SREENIVASAN

A SOFT-COMMODITY giant with exposure to high-growth markets and commanding a premium over its peers because of its deep vertical integration which delivers a higher return on equity (ROE), more stable margins and stronger cash flows.

That is how Morgan Stanley described palm- oil giant Wilmar International in a 45-page report on March 26.

But this could turn out to be an apt description of mainboard-listed GMG Global as well three years down the road, or perhaps sooner.

Listed in 1999, GMG is the only pure natural rubber play on the Singapore Exchange (SGX). It has some 43,000 hectares of rubber plantation land in the African countries of Cameroon and Cote d'Ivoire (Ivory Coast), only half of which is now under cultivation. It has also bought into two processing plants in Kalimantan, Indonesia, with a total capacity of 55,000 tonnes.

In all, GMG produced some 75,000 tonnes of natural rubber last year. This will rise to over 100,000 tonnes this year, or two-thirds of existing capacity.

In October 2008, Chinese state-owned enterprise Sinochem Corp bought a 51 per cent stake in GMG for $265 million averaging 26.5 cents per share. Last year, it picked up its share of a $100 million rights issue, effectively bringing down its price in GMG to 17 cents per share.

Sinochem is a Tier 1 state-owned enterprise (SOE). It is also China's 10th largest company by revenue, a component stock of the Shanghai Stock Exchange index, and a Fortune Global 500 company for 17 years. With assets of more than 20 billion yuan (S$4.1 billion), it is also China's largest rubber player, supplying some 300,000 tonnes last year to 150 end-users, including multinational companies in the country. The company - which also supplied 100,000 tonnes of synthetic rubber to the Chinese domestic market in 2009 - currently controls over 10.5 per cent of the Chinese market for natural rubber (for scale comparison: the second biggest player supplies just 3 per cent). It wants to raise its market share to 15 per cent.

Meanwhile, China's thirst for natural rubber has grown an average of 10 per cent annually. Last year, it consumed 2.9 million tonnes, or almost 30 per cent of global natural rubber output. The only domestic rubber supply is some 500,000 tonnes from Hainan, in southern China. The rest is imported. The price of natural rubber has risen to its highest levels since mid-2008. Not surprisingly, China considers natural rubber a strategic asset.

This places Sinochem in a unique position. It also gives GMG a unique role as Sinochem's global platform for the production, procurement and trading of natural rubber. On its part, GMG has already expressed its ambition to be among the world's largest vertically integrated natural rubber players within the next 3-5 years. But to do so, its production will have to rise five-fold.

Unlisted Lee Rubber, with its long track record, already produces some 500,000 tonnes a year. GMG has to match that.

With over $160 million of cash in the kitty and virtually no debt, the company has the means to scale up. It has already bought into a second processing plant in Kalimantan this year and is on the lookout for more. Also, only half of its 42,000 hectares of plantation land in Africa is currently planted.

But GMG has to move beyond just production and output; it has to execute its vertical integration strategy, a la Wilmar. This means scaling up its rubber trading capabilities.

Fortunately, it has a powerful parent in Sino- chem which can help make all this happen. For comparison, there is no pure listed rubber play against which GMG can be benchmarked. But there are other soft-commodity players in palm oil which have similarities. Wilmar (with a market capitalisation of some $42 billion) has a price-book value of 2.7 times. Indofood Agri ($2.2 billion) is trading at 2.2 times book. GMG ($330 million) is trading at just 1.2 times book.

Back to Morgan Stanley's report.

Just over four years ago, the newly restructured Wilmar was trading at 80 cents per share. Today, the stock is up some nine-fold. Yet Morgan Stanley reckons it is still undervalued, and has a price target of $8.00 on the stock.

GMG is not a Wilmar; at least not yet. But it has the resources, cash, market and parentage to get there. It's a question of execution.
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
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Re: GMG Global

Postby winston » Tue Apr 06, 2010 9:20 am

TOL:-

1) Why GMG ? Why not another listed company ? Which one ? In Malaysia or Indonesia ?

2) Wilmar has strong management. Not sure about GMG.

3) Synthetic rubber can replace natural rubber ?

4) How stable are those African countries ie. Cameroon and Cote d'Ivoire (Ivory Coast) ?
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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Re: GMG Global

Postby eauyong » Tue Apr 06, 2010 9:27 am

Heard through the grapewine that the unofficial cartel is very strong in controlling (suppressing) the price of natural rubber. Seems cartel members includes the big tyre manufacturers. ;)
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Re: GMG Global

Postby millionairemind » Tue Apr 06, 2010 9:30 am

Those interested in tracking prices of natural rubber, this is the website I use.

http://www3.lgm.gov.my/mre/daily.aspx

The prices have more than doubled for each grade of rubber in the last year.

I am not vested in gmg at this juncture.
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Re: GMG Global

Postby winston » Tue Apr 06, 2010 3:59 pm

Up 20.6% now. Was there anything new in the Business Times article this morning, that should affect the price by that much ?

Pump & Dump? My observation is that the BBs always make use of good news to get out and they normally sell on the way down ...

Normally, I wont even notice such price action on the SGX but because HK is close today, I came to
look-see at the SGX casino :roll: :roll:
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Re: GMG Global

Postby winston » Wed Apr 07, 2010 7:38 am

Not vested.

Some presentation materials:-

http://info.sgx.com/webcoranncatth.nsf/ ... penelement
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Re: GMG Global

Postby kennynah » Wed Apr 07, 2010 1:55 pm

winston wrote:Normally, I wont even notice such price action on the SGX but because HK is close today, I came to
look-see at the SGX casino :roll: :roll:


how come HK is closed today?
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Re: GMG Global

Postby millionairemind » Wed Apr 07, 2010 6:48 pm

This ticker was up 20% intraday to 24cts...

Before closing at 22cts...

Perhaps another puff or more to go, before all the suckers are caught holding the baby.... :twisted:
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Re: GMG Global

Postby Musicwhiz » Wed Apr 07, 2010 7:23 pm

What's going on here? Are prospects really so good for this company? The next Noble Group?? :lol:

I read the presentation materials. Why issue rights when you have 3.5c per share of cash and you are in net cash position? For expansion? In that case, let's see how the expansion goes first. People are buying into a lot of hype?
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