One of the worst-performing industries in the last five years (other than the oil and gas industry) has been the palm oil industry. During this period, companies like First Resources Ltd (SGX: EB5) and Bumitama Agri Ltd. (SGX: P8Z) saw their market capitalizations decline in excess of 30%.
Nevertheless, there are still plenty of reasons to like plantation companies. For one, their main product, crude palm oil (CPO), is an important food ingredient. Moreover, they generate rental-like income since palm oil trees can produce fruit for 20-25 years.
Those looking for investment ideas in this sector should keep reading as we compare First Resources and Bumitama Agri, two companies with significant palm oil businesses in Indonesia.
In part 1, we compared the latest full-year performances of both companies, and Bumitama Agri came out slightly ahead. In part 2, we’ll be looking at their track records over the last five years to find out which company did a better job of growing its business.
Let’s begin with First Resources. From 2013 to 2017, First Resources’s sales revenue grew from US$626.5 million to US$647.0 million in 2017. Yet, net profit attributable to shareholders fell from US$238.2 million in 2013 to US$137.7 million in 2017. The former was up by 3% while the latter was down by 42% during that period.
During the same period, Bumitama Agri’s sales revenue grew from IDR 4,063 billion to IDR 8,131 billion in 2017. Similarly, net profit attributable to shareholders improved from IDR 855 million in 2013 to IDR 1,193 billion in 2017. The former was up by 100%, while the latter grew by 40% during that period.
Bumitama Agri performed stronger than First Resources, both in terms of revenue and net profit over the last five years. With that, stay tuned for the final round of our comparison.
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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 contributor Lawrence Nga doesn’t own shares in any companies mentioned.