I bought on the basis of a potential 15-20% return if they mature.
I haven't bought a lot, and I suspect I'll be buying more. If I get a chance.
My reasons:
Projected consumption of palm oil is on an upward path.
The future growth of India & China and bio-diesel in Indonesia
COP average price seems to be stabilising and heading todwards the 2018 high, Reuters suggest it has further to go.
Bio-diesel consumption grew x100's over the last 2 years.
Trade war between China & USA might mean China replace soya bean oil with palm oil, they are already getting 75% of their palm oil from Indonesia.
All cycles come to an end, including commodities, and we seem a long way off the lows of 2007 when CPO prices were in the $200's
REA suggest they are expecting a bumper crop and how ever painful for Pref holders cancelling the div makes me feel a bit more comfortable. Now, if they'd only look at those Director's salaries.....
I haven't checked these figures out, and I don't believe them, but Yahoo Finance appear to be saying they employee 7000 people. That must be a signifcant contribution to the local economy if it's correct.
Overall, I think the reward v risk looks OK, but I wouldn't bet the farm on it, or the plantation.