08-12-2014, 08:28 PM
(08-12-2014, 12:37 PM)chongsk Wrote:(08-12-2014, 11:37 AM)secretinvestors Wrote: Hi all, any opinions about how the recent oil price rout will affect the business of lubricants and specialty chemical companies like AP Oil?
My take is that it won't be good for companies who kept huge stock bought at high prices in the short run. However, if low oil prices are sustained at an extended period of time, overall it'll be advantageous for these companies in the longer term due to reduced cost. Of course, reduced cost may just lead to competitive pricing in their products which at worst, may neutralize any benefits from lower costs.
AP Oil has kept its stock relatively low and with its more than 30 years of experience and track record in this industry, I believe it will at least maintain its current strong bottom line results for the coming years. What do you think?
If oil is the company's major cost item or main ingredient of its manufactured product, so when price of oil tumbled significantly, selling profit will also fall because profit is X% of product cost.
It all depends, Trading income may take a dip as they normally stop trading when price is volatile.
As for their products, they tend to favor lower oil prices to they have bigger selling margins.
Think overall the lower oil price will have a slightly positive effect on results if they have been able to manage their inventory properly (not too much stock).