AXELUM Analysis: Why You Should Look Beyond AXLM’s Projected Revenue in 2019

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AXELUM Analysis: Why You Should Look Beyond AXLM's Projected Revenue in 2019

According to the article on BusinessWorld, “Axelum warns revenues may dip this year.

Here’s my take on Axelum Resources Corporation’s projected decline in revenue for 2019.

The decline in the global price of coconut oil started in the last quarter of 2017.

Coconut Oil Monthly Price - US Dollars per Metric Ton
Source: https://www.indexmundi.com/commodities/?commodity=coconut-oil&months=120

However, the average price of coconut oil worldwide is projected to increase by an average of 4.75% per year at least until 2025.

Average prices for coconut oil worldwide from 2014 to 2025 (in nominal U.S. dollars per mt)
Source: https://www.statista.com/statistics/675808/average-prices-coconut-oil-worldwide/

Understand that Axelum does not control the global price of coconut oil. While I put weight in the non-controllable costs of a company, I put more weight in the controllable ones.

AXLM is in a strategic business position domestically and internationally. The Philippines is the number one producer and exporter of coconut oil in the world.

Overview Of Global Coconut Oil Market
Source: https://www.tridge.com/intelligences/coconut-oil/price

If the study-based projection on the gradual increase of the global price for coconut oil will be realized, AXLM’s plan to go on IPO is a wise business decision to initiate horizontal expansion. Horizontal expansion means more volume.

Why am I citing volume?

UA&P’s study says that the demand for coconut oil will increase by 12-20% from 2019 to 2023 with the US and European market as the top buyers of the Philippine coconut oil.

Axelum’s IPO, together with the uptrend projection in the global price of coconut oil and bullish forecast for the demand on coconut oil, is a brilliant preparation for what’s ahead.

When all is said and done, I still strongly recommend that you apply risk management in trading AXLM once it debuts in the Philippine Stock Exchange.

No matter how bullish the data-driven analysis is, the market has no respect for anyone’s experience in the market. It will go wherever it wants to go.

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