GREEN OCEAN CORPORATION SDN. BHD. (GOCEAN) - GO GREEN, BE GREEN, SELL GREEN - PERSONAL VIEWS BY NIK ZAFRI


(Latest Development! 10.15am - 30/12/2010
STOP PRESS : Plantation related stocks up"

As forecasted - with news that CPO will go up from RM3k-3.5k/metric tonne, today - as I speak - around 9.30am, 30/12/2010 - till now, GOCEAN is experiencing major changes in its price. Congratulations GOCEAN.)



Disclaimer : I do not represent the corporation in this article. Whatever being expressed is solely the author's opinion. Please refer their official website for further information.

I've been looking into some 'sleeping giants' for a long time.



And today I wish to speak on a corporation that attracts my attention for the last 2 weeks of trading. I hope everyone will share my enthusiasm.

(Please don't base your views on their current performance of shares...just read on)

The company was formerly known as Online One Corporation Berhad and changed its name to Green Ocean Corporation Berhad in April 2009. Green Ocean Corporation was incorporated in 2003 and is based in Petaling Jaya, Malaysia.

Green Ocean Corporation Berhad (GOCEAN), an investment holding company, engages in the development of biotechnology products in Malaysia.

As we all know, GREEN is now associated with almost all industries in this world. We have LEEDS Certification (Green Building), EMS ISO 14000, Sustainability, Big Campaigns and various environmental awards for corporations practicing GREEN as part of their corporate responsibility. GOCEAN is definitely one of them - with its strong motto - BUY GREEN, BE GREEN, SELL GREEN.

So to all GREEN lovers out there (yes I'm one of them), here's your chance to save the EARTH!

The company involves in crushing palm kernel, refining palm oil and palm kernel oil, and producing palm kernel expellers and cooking oil.

Despite some quarters felt that maintaining the neutral call on the Malaysian palm oil sector due to current 2 year old palm oil price upcycle, and that Malaysia is continuing with a plan to mandate a 5% palm-oil-based methyl ester blend in conventional diesel by June 2011 (next year), I still somehow notice significant changes in Bursa Malaysia Derivatives’ star product, the Crude Palm Oil Futures contract, or better known by all of us as the FCPO contract which has been cited as the MOST actively traded derivatives contracts and has been the GLOBALLY PREFERRED BENCHMARK FOR THE PRICING OF CPO.

If this is the case, then, GOCEAN and their counterparts will definitely see some significant changes next year. Let's say it's June, 2011, at least they can still prepare themselves for the changes.

GOCEAN also provides information communication technology solutions, including software, and third party hardware and software; implementation and integration services; business continuity outsourcing solutions; and business intelligence solutions.

Being a self-ICT-literate person myself, GOCEAN has definitely invested on the right product. The setback however is unexpected - perhaps GOCEAN is too ahead of time with this plan. Unless the corporation has something to do with government contracts (which I think they will be heading towards that direction) and in the future, taking in many ICT professionals in the field (during expansion), then I know in my heart that ICT is a GOOD Investment. Who knows, GOCEAN might hit the jackpot.

Apart from the abovementioned, GOCEAN offers financial services solutions, infrastructure services, business service management, and information security solutions.

Further, it engages in the research and development of palm oil related industries; and sales, marketing, and distribution of enzyme, conjugated linoleic acid, and direct fed microbials, as well as the marketing and distribution of storage solutions.

Now, can anyone tell me that GOCEAN has no potentials in 2011? I have also noticed some 'reengineering' are being actively done in the company - so someone inside GOCEAN is smart enough to prepare itself for 2011 - for the BEST. We can expect the Q3 2011 results next February. (aah you need tips : Look at the 'expected book value' and 'the future market value' based on my article herein - also look into debt/equity ratio...do some homework 'lah')

Figures might not look so interesting but it's the indicators in the figures that will tell investors what is the future for them. (I've read their past annual reports - I personally think that it's a highly potential company to invest in the long run)

I like to quote Yang Amat Berbahagia Tun Mohamed Dzaiddin Abdullah, Chairman of Bursa Malaysia in the recent 21st Palm & Lauric Oils Conference

"Whether it is for the physical or futures markets, in managing volatility, mitigating risk factors and ultimately ensuring that the industry remains vibrant, price trends are important for palm oil players."

MALAYSIA is a melting pot. A lot of people still do not realize it yet

SHORT NOTE : COMMODITY PRICE CORRELATION TO OIL, GOLD AND CURRENCY - BY NIK ZAFRI



What is the next move?

This is one of the most important question being asked to me by traders as everyone wants to make money.

"I've attended wealth seminars and attempted my level best to follow everything that has being taught. It works to a certain level but after a while, it's already too late for me to turn back. I made losses later"


I told the traders that making money is easier said than done.

Those who are involved in currency trading need to take into account a lot of things rather than be "sitting at your pc, laptop or any other gadgets and look at the charts" (and 'look like a professional' and hope that passers by looking at you would deem highly of you while you're sitting at Starbucks or some 5 Star Hotel Lobby wearing smartly using free wi-fi facility without buying any refreshments)

Economy still and will play an important role - all rules apply - export, demand and supply, growth, interest rates, GDP etc. Without all these (FX + Economy), then the next step would probably be is - to justify how politics play a role in what we termed as "sentiment".

All sentiments have a justification. Without justification - the sentiment is equivalent to a rumour or turned against you as speculation and irrational hedging.

Understand that commodity can play a big role in the market.

Once you see that a certain currency has a weaker correlation (with commodity price), then put them aside immediately. Don't take any further risk. (in short - don't try to be a hero)

What about Oil and Gold?

Yes, two of the most popular benchmark. Here's the deal :

Fluctuation of Commodity Price = Sudden surge of oil price

Sudden Surge of Oil Price is most likely TEMPORARY (trust me) - yes, at least a year or so, it will plummet back.

Gold hit a high price (again TEMPORARY) = and again hit a low price also in a year or so (every year I see this trend)

Once again the price of commodity; taking into account - global recession; plays a role in understanding the bearish and the bullish situation.

USD and oil are closely related but the correlation tends to break on daily basis - but it becomes stronger in the long run. This however requires patience and no panicking. USD is an inverse trading instrument thus making the 'strangest' thing happening - USD go down, oil price goes up - vice versa.


(Japan)

(I need to point out that whenever oil price skyrocketted will make some countries suffer for example Japan. A fully industrialized nation but depending on the imports for primary energy. Just look at the trading history of USD against Yen - it's important that that oil price 'to fall' to ensure break a certain level to hit lower)


Which Currency correlated with Gold in a harmonious way?



You don't need 3 guesses for that - it's definitely Australian Dollar. (it's not surprising that they are the top 3 gold producers) Australian dollar appreciates as much as the rising of gold prices. New Zealand is getting advantage out of Australia's prosperity and NZ never had much problem exporting its goods. Again seeing the fine commodity trend in Australia, I'm not a bit surprised that they will always be the FIRST to be out of the recession. So again, commodity!


Political Sentiment?

Neutrality and Uncertainty of Politics do play a big role in correlating gold prices and the currency.

Here's my simple formula :

1) A healthy politics (in the eyes of the traders) will usually turn gold as a support a certain currency

2) Unhealthy politics will usually switch the trading of that particular currency to another currency which is backed up by gold during 'healthy politics'.

The only thing that can break this relationship is decoupling (refer 09/2005 when USD decoupled from gold price movements)

Closing

Smart experienced traders tend to switch commodity and currency or vice versa. The earn interest with high margin but taking into account countries having interest rates. Again, I didn't say that there is no risk.

e.g.

3% from e.g. Central Bank
= amount earned subtract 0% rates paid (shorting USD for e.g.)
= 10X leverage (underleveraged rates).
= surge of interest income whenever net of exchange rate changes.

But don't count on this - you will see how dangerous this situation to you when the trade turns against you.



Play safe : Although the effects are slow, commodity prices can still be used as a benchmark on gold, oil and currency market.