How Does Golden Agri-Resources Ltd Stack Up Against United Plantations Berhad?

United Plantations Berhad (KLSE :2089.KL) might be one of the most efficient palm oil companies listed on Bursa Malaysia, Malaysia’s stock exchange.

The oil palm plantation owner has generated a respectable return on equity ranging from 11% to 23% since 2003. And, it has achieved that level of return with minimal or no debt on its balance sheet. How does the company stack up against Golden Agri-Resources Ltd (SGX: E5H), one of the Singapore stock market’s largest palm oil producers?

Size does matters

United Plantations is considered as a mid-sized plantation company, with just 50,000 hectares of land in Malaysia and Indonesia for the planting of palm oil and coconut trees. In comparison, Golden Agri-Resources is the world’s second largest palm oil plantation company, with a total planted area of 485,400 hectares in Indonesia.

In terms of assets, Golden Agri-Resources has more than US$8 billion worth on its balance sheet while United Plantations only has RM2.5 billion.

As can be seen, United Plantations is far behind Golden Agri-Resources when it comes to size.

Efficiency matters too

But when it comes to other measures of efficiency, United Plantations excels too. It has generated an average return on assets of 10.4% from 2011 to 2015. It has also achieved a gross margin of at least 54% during that period.

Golden Agri-Resources, on the other hand, only managed a return on assets of just 2.7% for the same time frame. Its highest gross margin in that period was also just 30%, which is significantly lower than that of United Plantations.

As mentioned before, United Plantations has kept a clean balance sheet with almost zero debt since 2006. Golden Agri-Resources on the other hand, has a net debt to equity ratio of 66% in the latest quarter.

So, United Plantations has managed to keep a clean balance sheet, maintain strong margins, and earn a high return on its assets in recent years – Golden Agri-Resources can hardly keep up.


Golden Agri-Resources is currently trading at 0.9 times its tangible book value and 44 times trailing earnings. While the latter looks high here, it must be noted that the figure is inflated given the firm’s weak earnings.

United Plantations on the other hand is valued at more than 2.4 times its tangible book value and has a price-to-earnings ratio of 18.8.

Foolish Summary

Golden Agri-Resources and United Plantations are two companies operating in the same industry. Yet, there is a huge difference between the two as investment options. Investors should be cognizant of the differences between the two before any investing decision is made.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim doesn't own shares in any companies mentioned.