Highlights

Momentum play

Author: Toppick2019   |   Latest post: Sun, 23 May 2021, 11:18 AM

 

3 major beneficiaries of high CPO price

Author: Toppick2019   |  Publish date: Sun, 23 May 2021, 11:18 AM


 

Valuation of plantation stocks - ranking by lowest PER to highest PER (with location)

Stock  Market Cap RM mil Net profit Trailing PER DPS sen  Location of plantation

SWKPLNT

708

61

11.6

10

Malaysia

UTDPLT

5,844

360.3

16.2

85

Malaysia&Indonesia

INNO

608

36.9

16.5

6.5

Malaysia

HSPLNT

1,568

90.3

17.4

7

Malaysia

TSH

1,658

79.1

21

2

Malaysia&Indonesia

IJMPLNT

1,744

71.3

24.5

2

Malaysia&Indonesia

KLK

24,345

962.8

25.3

50

Malaysia&Indonesia&Liberia

SIMEPLT

32,426

1,185

29.2

11.6

Malaysia&Indonesia&PNG

IOICORP

25769

872

29.5

8

Malaysia&Indonesia

TAANN

1,343

45.1

29.8

15

Malaysia

*Exclude companies with poor fundamentals/lossmaking/negative growth

**This table is the same as previous post except addition column for location of plantation landbank

***Major beneficiaries are companies with operation in Malaysia only. CPO price in Indonesia is capped at RM2,700-RM2,800 per tonne by higher export duty.

 

 

3 major beneficiaries of high CPO price 

Stock  Market Cap RM mil Net profit Trailing PER DPS sen  Location of plantation

SWKPLNT

708

61

11.6

10

Malaysia

INNO

608

36.9

16.5

6.5

Malaysia

HSPLNT

1,568

90.3

17.4

7

Malaysia

 

 

Windfall profits for plantation stocks

Plantation companies are very likely to make windfall profits in first 6 months of 2021.

Monthly average CPO prices for April 2021 is RM4,220 per tonne, 83% more than RM2,299 for April 2020. 

Monthly average CPO prices are ~RM2,300 per tonne in 2Q2020. As long as CPO prices remain above RM3,000 per tonne, plantation stocks will continue to make windfall profits. 

 
 
 

Monthly average CPO prices

http://mpoc.org.my/monthly-palm-oil-trade-statistics-2021/

 

 

 

Disclaimer

All information provided here should be treated for informational purposes only. This is NOT a buy or sell recommendation. Do your own research or consult your investment advisor before you invest. It is solely reflecting author's personal views and the author should not be held liable for any actions taken in reliance on information contained herein.

 
  LimitUp likes this.
 
calvintaneng BETTER BUY TA ANN (IT IS TOP HOLDER OF SWKPLANT)

BUY TSH (IT OWNS INNOPRISE)
23/05/2021 10:26 PM
koowakzai MHC is undervalue as well. MHC hold 27% of cepat wawasan.
23/05/2021 11:14 PM
gladiator Ta ann, Cepat, MHC will enjoy high profit and I prefer Jtiasa. But steel will enjoy Super profit look at Choobee.
24/05/2021 1:48 PM

The most undervalued plantation stocks

Author: Toppick2019   |  Publish date: Sun, 9 May 2021, 9:39 AM


 

Valuation of plantation stocks - ranking by lowest PER to highest PER (latest list)

Stock  Market Cap RM mil Net profit Trailing PER DPS sen Dividend yield (%)

SWKPLNT

708

61

11.6

10

4

UTDPLT

5,844

360.3

16.2

85

6.1

INNO

608

36.9

16.5

6.5

5.1

HSPLNT

1,568

90.3

17.4

7

3.6

TSH

1,658

79.1

21

2

1.7

IJMPLNT

1,744

71.3

24.5

2

1

KLK

24,345

962.8

25.3

50

2.2

SIMEPLT

32,426

1,185

29.2

11.6

2.5

IOICORP

25769

872

29.5

8

1.9

TAANN

1,343

45.1

29.8

15

5

*Exclude companies with poor fundamentals/lossmaking/negative growth

 

Most undervalued plantation stocks by trailing PER  (2020 production growth)

1. SWKPLNT at  11.6x  (production increase 22%)

2. UTDPLT  at  16.2x  (increase 7.7%)

3. INNO at 16.5x  (increase 4%)

 

1. SWKPLNT  (production increase 22%)

 

2. UTDPLT  (increase 7.7%)

 

3. INNO  (increase 4%)

 

Windfall profits for plantation stocks

Plantation companies are very likely to make windfall profits in first 6 months of 2021.

 

Monthly average CPO prices are >RM3,800 per tonne in 1Q21, 41% more than the average RM2,700 per tonne in 1Q20.

 

  CPO@RM2,700    CPO@RM3,800 Change %
Sales   2,700      3,800     +41%
Operating cost   2,000      2,000  
Operating profit      700      1,800    +157% (3.8x sales growth)

*Only applicable to Malaysia operations. CPO price in Indonesia is capped at RM2,700-RM2,800 per tonne by higher export duty.

 

For example, a plantation company will see operating profit increase 157% at average CPO prices of RM3,800 per tonne, assuming all-in operating cost of RM2,000 per tonne. Operating profit increase 3.8x sales growth because all the increase in CPO prices flow directly to the bottomline.

 

Monthly average CPO prices are ~RM2,300 per tonne in 2Q2020. As long as CPO prices remain above RM3,000 per tonne, plantation stocks will continue to make windfall profits. 

 
 
 

Monthly average CPO prices


http://mpoc.org.my/monthly-palm-oil-trade-statistics-2021/

 

 

 

Disclaimer

All information provided here should be treated for informational purposes only. This is NOT a buy or sell recommendation. Do your own research or consult your investment advisor before you invest. It is solely reflecting author's personal views and the author should not be held liable for any actions taken in reliance on information contained herein.

 
  2 people like this.
 
stockraider Remember 2 of the world most richest & savvy investors w.buffet & bill gates like investing in farmland now mah!

U can emulate them now too mah....!!

Thats why the 2 richest savvy investors have taken note the point of concern that palmoil & commodity price cannot going up forever like the case of glove & eventually the commodity price will also fall 1 day mah!

To address this issue or concern w.buffet & bill gates, say buy farmland & palmoil plantation, even the commodity price fall, u still have great protection on the value of cheap plantation land & farmland mah..!

If u buy into cheap land, u have both margin of safety accorded by cheap land plus prospect of reaping great profit from high palmoil price loh!

Thus u should Quickly Buy into palmoil plantation now, b4 its price shoot up mah!

Time to be a little bit more contraian in view of mkt at reasonable high level mah!

Warren buffet says inflation is definitely coming in view of low interest interest and speculative sign such as bitcoin, rubbish stock price run up sky high and unrealistic stock valuation & expectation and now raw commodities price run up mah!

Bill Gates already bought alot of farmland at low in preparation & in anticipation for the coming armmagedoom coming mah!
Why would one the world tech best richest owner switch alot of his investment into farmland, this bcos farmland or value real estate if it is bought at reasonable low price, u cannot go wrong over longterm bcos the availability of land is limited, u cannot manufacture land like bitcoin mah!

Coming back to msia the equivalent to farmland is oil plantation, u still can get it real cheap & it is paying u reasonably good dividend loh...this is the best defensive & offensive play like bill gates and warren buffet had highlighted mah!


As calvin sifu said timber is at record price & palmoil at record price surely some optimism will spillover to plantation & timber share price mah!

But this up 1 to 2 sen is chicken feed mah, why up so little leh ??

Timber & palmoil share r suffering from lack of production mah and also huge impairment losses on its assets mah & previous falling share price mah!
Thus they are jittery on recovery of palmoil & timber share loh!! They want to see actual profit b4 jump in loh!!
That means if u base on profit...as indicator that means the share price will be lagging loh!

Then why promote Wtk leh ??
1. The owner , directors and insiders already accumulating quietly without fanfare mah!
2. The palmoil & timber production volume of wtk, mhc, jtiasa, boustead, ijm plant already creeping up loh...this is further support by the record price of its commodities. Just imagine u have higher prices & higher volume....that will be a very important sign of higher big profit coming mah!
3. The share price already corrected over 3 yrs of downtrend previously, when there is a big shakeout of all the weak holders...u can only grow more optimistic as time past by loh!
4. Wtk is sitting on some prime land that invested at a very low cost near major town & city, they are good development mah!
5. With all the liquidity & quantitative easing & low interest rate environment, u can see big inflation will be coming loh...!! Wtk in commodities business plus very big cheap land bank is a very good inflation protector mah!

Based on the above i think wtk , jayatiasa & ijmplant is the best pick to make profit & this is concur by sifu calvin findings also mah!

Posted by pjseow > May 8, 2021 6:08 PM | Report Abuse

Calvin and Ahbah , Investment timing is very important and be at least medium and long term horizon . Dont buy at the peak . Gloves stocks had came down 50 to 60 % from the peaks in August last year . I did not promote glove counters then because the earnings were still not proven , PE were high . Glove stock prices peak before its ASP peak . There was a 9 months to a year lead of the share prices over its ASPs . Glove stocks had finally PROVEN to deliver fantastic results in the last 3 qtrs after August 2020 while their prices came down 50 % . THeir PE are less than 5 while they will continue to deliver superb results in the next few years with double and tripling of capacities . The palm oil price cannot keep going up forever since it started picking up 2 years ago in 2019 .Likewise , the oil palm counters will peak soon or already peak now before its palm oil ASP peak which may happen in 3 to 6 months time or even earlier . When palm oils ASP came down finally , do the plantation counters have doubling of capacities to compensate for the drop in ASPs ?
09/05/2021 11:13 AM
stockraider Already confirmed palmoil plantation is going to make windfall profit ma!

Next is to make windfall gain on plantation stock price loh!

Jump in b4 too late loh!

Cpo at record rm 4700 per ton, the palmoil share price will go on rampage soon loh!
09/05/2021 11:18 AM
Citadel9999 ya keh
??? so good keh
09/05/2021 11:19 AM
stockraider Why windfall tax on palmoil & not gloves leh ?

U see palmoil is a commodity n it make use of msia natural resources like land & weather to make monies mah!

When there are super profit, the govt wants to tax on the windfall...loh!

The infra to tax more on palmoil is there mah!
Like having export tax...!!
Cess levy etc loh...!!
On top of that when palmoil do well...income tax is still being levy at existing rate the govt still collect more income tax mah!

Gloves...although it is a commodity...but it is an industrial product mah!

When super profit is make....they still pay high income tax...base on the proportionate tax rate applicable loh!

There is nothing to stop. msia govt..imposing more tax or windfall tax on gloves loh...but where do we stop from here leh ??

Then we should impose higher tax on telcos, banks, technology business as well whenever they make super profit meh ??

At the end base on this windfall policy the business men will see msia as a pariah country to do business with mah!
Thus they make invest else where loh!

They are no consistency & rule of law...if everytime, out of jealousy of people making more monies, The govt imposing new higher tax rate or windfall tax loh!

The good thing is the gloves realise there is need for social service...they have voluntary donated extra Rm 400m collectively to the msia govt for covid 19 fund loh!

Despite palmoil paying windfall profit to the Govt, palmoil plantation still make wind fall profit mah!


Posted by DickyMe > May 9, 2021 12:45 PM | Report Abuse

Plantation windfall profit??

Then it is alright to impose tax on windfall profit..
09/05/2021 12:52 PM
stockraider U must understand loh...a weaker USD is a strong case for commodity to go up mah!

In that case investing plantation is the best hedge against inflation beside giving good cashflow in the form of dividend loh!

Thats the reason why bill gates/ w.buffet says investing in farmland or equivalent plantation mah!

Posted by pjseow > May 9, 2021 1:03 PM | Report Abuse

Miao Miao 7 , I tends to agree with you on the effect of US dollar downtrend due to huge QE by Biden . I remembered when Obama did a 2 trillion QE in 2009 and 2010 , our Ringgit strengthen from 3.8 to 3.0 . Last year D TRump did a 4 trillion QE . THis year Biden will do another 6 trillions money printing for pandemic , infrastructre and high tech investments .With oil price on the up trend our Ringgit will rise with respect to US Dollar . Unless Malaysia also print faster than US because of lower tax collections due to covid pandemic , our ringgit may remain at 4 level .
09/05/2021 1:10 PM
pang72 Very good article Eventhough simple!
10/05/2021 11:10 AM
stockraider Congrats all plantation investors
10/05/2021 11:28 AM
ValueInvestor888 Perhaps the author forgot one more small and beauty plantation co : TECK GUAN PERDANA BHD

PE less than 10
10/05/2021 11:54 AM
TheGardener Blood for sales!!! Any taker!?
10/05/2021 11:57 AM
ValueInvestor888 Teck Guan, discovered by the Edge boss in Tong's portpolio, current PE 7.6.
10/05/2021 12:04 PM
stockraider Ini bukan plantation...they cocoa crusher mah!

Posted by ValueInvestor888 > May 10, 2021 11:54 AM | Report Abuse

Perhaps the author forgot one more small and beauty plantation co : TECK GUAN PERDANA BHD

PE less than 10
10/05/2021 12:05 PM
ValueInvestor888 https://www.malaysiastock.biz/GetReport.aspx?file=AR/2020/6/29/7439%20-%201714524289412.pdf&name=Annual%20Report%202020%20(TGP)_compressed.pdf

They have both palm oil and cocoa plantation. All plantation companies also have mixed plantations lah...
10/05/2021 12:16 PM
ValueInvestor888 https://www.theedgemarkets.com/article/teck-guan-buys-510acre-land-rm12m-boost-oil-palm-output
10/05/2021 12:17 PM
Jason Tan sudah lambat lah... harga sudah naik tinggi.
11/05/2021 12:31 PM

Master (7029) The Hidden Jewel in Renewable Energy Industry

Author: Toppick2019   |  Publish date: Mon, 7 Dec 2020, 5:18 PM


 

Master-Pack (7029) is arguably the best recovery play, riding on the expansion of First Solar Inc in Malaysia. 

 

First Solar, one of the largest solar panel manufacturer in the world, is scheduled to start it’s second factory in Malaysia in 1Q21

 

 


 

Master-Pack has over the last 28 years, made a name for itself as an innovative niche player in the packaging industry.

 

Sales to the solar industry has been booming for last few years, growing by a CAGR of 77% from 2016 to 2019.

 

Thanks to First Solar. 

 

Sales to Solar Industry

RM. Mil

2016

24

2017

52

2018

69

2019

135

 

 

Master-Pack has also been tapped to serve First Solar’s operations in Vietnam starting July 2018. This is no small feat as US companies are very stringent on choosing their suppliers and usually looking on build long term relationships.

 

Master-Pack Vietnam’s operations started in 4Q2018 and running at full capacity in 4Q2019

 
 

Vietnam contribution grew 11x to RM58.3mil in 2019. 

 

 

 

Thanks to new contribution from Vietnam operations, Master-Pack profit before tax more than double to RM17.6mil in 2019.

 

Over the period from 2015-2019, revenue and profit before tax grew by CAGR of 28% and 48% respectively.

 

 

 

 

Temporary blip in earnings

All is well until Covid-19 hit. For the first 9 months of 2020, Master-pack’s performance was affected by TEMPORARY drop in revenue due to business interruption from MCO and change in product model by its major customer I.e. First Solar.

 

Nevertheless, Master-Pack still able to remain profitable.

 

In fact, Master-Pack’s net cash position improved substantially from RM10.5mil to RM30.2mil. 

 

 

https://disclosure.bursamalaysia.com/FileAccess/apbursaweb/download?id=211770&name=EA_FR_ATTACHMENTS

 

 
 

Financially, Master-Pack has a sturdy balance sheet with net cash position of RM30.2mil.

 

As of 30 Sept 2020, it had cash of RM36.1mil and total borrowings of RM5.8m. It had total shareholders equity of RM110.8mil or RM2.03 per share.

 

 

Simple valuation on Master-Pack vs peers

 

 

Market cap RM mil

Net profit

Trailing PER ROE Financial.Position

MUDA

738

53

13.9

5.5%

Net debt

PPHB

218

20

10.9

7.6%

Net debt

BOXPAK

163

9

18.1

3.7%

Net debt

MASTER

100

15.7

6.4

15.9

Net cash

 

 

MUDA, PPHB and BOXPAK are trading at trailing PER of 11x to 18x. Using the mid PER range of 15x for the peers, MASTER is worth RM235.5mil. That’s more than 2x MASTER current market cap of RM100m!

 

If we assume a conservative PER of 11x which is the lowest for its peers, MASTER is worth RM171mil. With 54.6mil share outstanding, that translates to  RM3.13 per share.

 

In fact, Master-Pack should be valued higher than its peers because Master-Pack has the highest profitability ratio “ROE” in the industry. ROE indicates how well a company's management deploys shareholder capital. In this case, Master-Pack generated the highest return for shareholders when compared to its peers.

 

Bear in mind this valuation does not include the additional revenue from Master-Pack Vietnam (which achieved full capacity only in 4Q2019) and First Solar new second factory in Malaysia.  

 

Safe to say that Master-Pack could grow their earnings in 2021 riding on the start of First Solar’s new second factory in Malaysia. 

 

https://s2.q4cdn.com/646275317/files/doc_financials/2020/q2/2020-08-06-Earnings-2Q-2020-PDF.pdf

 

 

Disclaimer

All information provided here should be treated for informational purposes only. It is solely reflecting author's personal views and the author should not be held liable for any actions taken in reliance on information contained herein.

 

 
Labels: MASTER
  2 people like this.
 
LaoTzeAhSir how come ROE 15.9? It's not the number I checked. where do you get this from?
07/12/2020 9:55 PM
Toppick2019 ROE = net profit. / average shareholder equity. Do your own calculations
08/12/2020 7:19 AM

The Crown Jewel of KPS: Dissecting the Hidden Value in this Under Appreciated Stock

Author: Toppick2019   |  Publish date: Sun, 15 Nov 2020, 12:00 AM


 

KPS (5843) is famous for making a killing on the disposal of its water asset.

 

From its divestment of SPLASH in April 2019 for RM765mil, KPS received RM570mil upfront cash payment and will be receiving additional RM195mil over the next 9 years, which will include a 5.25% interest rate. KPS had declared a special dividend of RM175mil or 32.6 sen per share following the divestment. The special dividend is in addition to final dividend of 4.25 sen per share.

 

KPS has subsequently ventured into industrial packaging, electronic manufacturing services (EMS) and plastic injection moulding. 

 

Let’s delve into the key assets of KPS and their potential values.

 

KPS owns 2 integrated plastics injection moulding/EMS companies:

1. KPS acquired Toyoplas Manufacturing (Malaysia) Sdn Bhd for RM311mil in 2019.

2. KPS acquired CPI (Penang) Sdn Bhd for RM250mil in 2018. 

 

Toyoplas and CPI recorded combined net PAT of RM65mil last year.

 

The acquisition of Toyoplas comes with a net profit guarantee of RM38.6mil in FY19 and RM42.3mil in FY20. 

 

 

KPS says that the acquisition of Toyoplas presents KPS with an opportunity to expand its plastic injection moulding business, which is currently undertaken by CPI.

 

The acquisition of CPI comes with a net profit guarantee of RM25mil in 2018, and RM26mil in 2019. 

 

 

 

Simple valuation on KPS’s EMS business vs peers

 

  Market cap RM mil Net profit Trailing PER Net margins
SKP RESOURCES 

2,350

75.7

31

4.1%

ATA IMS

2,734

78.3

34.9

2.3%

VS INDUSTRY

4,463

115.9

38.5

3.6%

TOYOPLAS + CPI

1,365?

65

21

11.4%

 

SKP RESOURCES, ATA IMS and VS INDUSTRY are trading at trailing PER of more than 30x. Using the lowest PER range of 31x for the peers, KPS’s EMS business is worth RM2,015mil. That’s more than 4x KPS current market cap of RM468m!

 

If we assume a 40% PER discount to the industry average for its smaller size, it’s EMS business is worth RM1,365mil. With 537.4mil share outstanding, that translates to  RM2.50 per share!

 

To be extremely conservative, we are assuming a very big discount in spite of its superior double digit profit margins when compared to its peers’ low single digit margins.

 

Both CPI and Toyoplas are very profitable businesses, as shown below.

 

https://disclosure.bursamalaysia.com/FileAccess/apbursaweb/download?id=85247&name=EA_GA_ATTACHMENTS

 

https://disclosure.bursamalaysia.com/FileAccess/apbursaweb/download?id=94747&name=EA_GA_ATTACHMENTS

 

3. KPS acquired Century Bond Bhd, an integrated packaging solutions provider, for RM208mil in Nov 2016. Century Bond recorded net PAT of RM15mil in 2016. With an est. 60% market share in Peninsular Malaysia’s cement bag market, CBB is the largest bag supplier in Peninsular Malaysia. Going forward, CBB plans to strengthen its position in the non-cement bags market.

https://www.theedgemarkets.com/article/kps-launches-rm210m-takeover-bid-century-bond

 

 

4. KPS has a 20% stake in Sprint Holdings, the highway operator of the Sprint highway. The 20% stake is said to be worth RM174mil

http://bernamamrem.com/viewsm.php?idm=34812

 

 

5. Other assets potentially worth more than RM300mil.

- 60% stake in King Koil mattress business (acquired for RM116mil in 2016)

https://www.theedgemarkets.com/article/kumpulan-perangsang-buys-60-stake-king-koil-mattress-owner

- 51% stake in Aqua-Flo’s water chemical products (recorded share of profit of RM2.9 mil last year)

- 51% in KPS-HCM (assets held for disposal worth RM92mil.)

- 40% stake in NGS Energy (recorded share of profit RM7.3mil last year)

- 60% stake in Smart pipe (acquired for RM5.1mil in 2016)

- Investment properties worth RM87mil.

 

 

 

 

Financially, KPS had total shareholders equity of RM956mil or RM1.78 per share. It had low gearing ratio. As of 30 June 2020, it had cash of RM251mil and total borrowings of RM564m. That translates to net debt of RM312mil on total assets of RM2,147mil.

 

Valuation summary

  RM mil
EMS business (Toyoplas + CPI) 1,365
Century Bond 208
SPRINT 20% stake 174
Other assets 300
Total assets 2,047
- Net debt 30 June 2020 311
+ SPLASH remaining payments 173
Net Assets 1,909

Fair Value (after 40% holding co discount)

1,145
No of Shares outstanding  537.4
Fair Value Per Share RM2.13
Potential upside 145%

 

No matter how you cut it, KPS looks undervalued at RM0.87.

 

 

Disclaimer

All information provided here should be treated for informational purposes only. It is solely reflecting author's personal views and the author should not be held liable for any actions taken in reliance on information contained herein.

 
  3 people like this.
 
gemfinder Y last quartet stil loss making?
15/11/2020 12:04 AM
dollardollarbill Nice work
15/11/2020 7:40 PM
shernlee last quarter loss making due to mco..overall its good..damn..bought too less.if tmr limit up reli wasted
15/11/2020 7:46 PM


APPS
I3 Messenger
Individual or Group chat with anyone on I3investor
MQ Trader
Perform Technical & Fundamental Analysis on Stocks
MQ Affiliate
Earn rewards by referring your friends
 
 

287  575  565 

ActiveGainersLosers
Top 10 Active Counters
 NameLastChange 
 BCMALL-OR 0.005-0.115 
 KANGER 0.070.00 
 SERBADK 0.420.00 
 BCMALL 0.145-0.01 
 SERSOL-WA 0.30+0.105 
 AT 0.0650.00 
 SERSOL 0.49-0.015 
 PUC 0.18+0.005 
 DNEX 0.755+0.025 
 CTOS 1.54+0.01 

FEATURED POSTS

1. MQ Trader - Introduction to MQ Trader Affiliate Program MQ Trader Announcement!
PARTNERS & BROKERS