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Overview
Financial Highlight
HeadlinesBusiness Background United Plantation Berhad cultivates and processes palm oil, coconuts, and other plantation crops. Its subsidiaries process and manufacture palm oil until it is ready to be packaged and distributed to customers worldwide. It owns light railway to transport products from palm trees to a handful of mills located on its property. Coconuts can be sold at a young age for drinking purposes, or as mature nuts to help produce milk, powders, and other products. End products produced by the company include cooking oils, ready-to-eat oils, soaps, and specialty fats. The remaining waste water and discharge from mill operations are used to produce fertilizers or shipped to ponds where it can be purified and released to rivers and waterways.
  JrWarren Thank you for the info Sardin. Plantation is a business depends on weather, what human can do is preparing for all the possible crisis and hope for the best, such as water shortage mitigation, forex fluctuation, and other controllable factors are well mitigated.... God factor such as El Nino and CPO price movement are out of control. QR got addressed labor issue, read it. 26/04/2024 12:47 PM Sardin Hi Mooven, I can't recall any question regarding to labour. In AR2023 you can see UP hires thousands of guest workers, and it mentioned for the first time they have more than enough labours. "...tireless efforts by our HRSS Department in bringing in 781 new Guest Workers through our Ethical Recruitment Procedures during the year. As I write this message, I can confidently state that we for the first time in years are ahead of our respective work." page 23 AR2023. programmes. 26/04/2024 3:20 PM observatory I compared 1Q24 results against 4Q23. This is what I found. For those who have studied please share your findings too. 4Q23 revenue: RM544m 1Q24 revenue: RM477m (-12% QoQ) 4Q23 operating profit: RM255m 1Q24 operating profit: RM171m (-33% QoQ) Plantation segment: 4Q23 segment revenue: RM337m 1Q24 segment revenue: RM309m (-8% QoQ) 4Q23 segment operating profit: RM218m 1Q24 segment operating profit: RM154m (-29% QoQ) Refinery segment: 4Q23 segment revenue: RM376m 1Q24 segment revenue: RM320m (-15% QoQ) 4Q23 segment operating profit: RM38m 1Q24 segment operating profit: RM16m (-56% QoQ) 27/04/2024 12:00 AM observatory On plantation revenue, 1Q24 CPO volume was far lower than 4Q23. Note B2 explains “The revenue for plantation segment decreased by 8.3% in the current quarter from the preceding quarter due to lower production” This was partly due to seasonality as CPO production declines from October to February (refer note A3). However, a bigger factor is 4Q23 CPO production volume was exceptionally high at 70k MT, 15% higher than same period in 2022. 1Q24 CPO production volume has since moderated back to 55k MT. Was the high production volume in 2H23 an aberration? How about decline in Jan-Feb and subsequent recovery in Mar? Has anyone studied other company outputs and how do they compare? Did the management say anything during the AGM? The 1Q24 CPO production volume 55,446MT * RM4,179 = RM232m is about 75% of 1Q24 plantation revenue. The other one quarter revenue may be contributed by PK, coconut and other factors I’m not aware of. 27/04/2024 12:03 AM observatory Note B2 explains that refinery segment revenue declines due to “due to lower sales volume”, I believe in tandem with the previously mentioned lower production volume. QoQ, segment PBT declined 58%, and segment operating profit declined 56%. Three reasons cited in the note 1. Lower volume hence lower profit 2. Higher forex loss at JV Unifuji (where share of profit declined from RM8m to RM1m) 3. Higher hedging losses as Unitata, which sold contracts earlier at lower prices, later had to unwind position and bought at higher prices to cover earlier position. Such hedging losses happened in a rising market just like in 2022. But when Unitata sells refined products, hopefully at higher prices too, a better margin could offset the losses. Don’t know how to estimate the hedging effects on profits/ losses. If anyone has any idea, please share your working. 27/04/2024 12:03 AM ooihk899 Bro, look forward, they sold forward around 195K tons @41xx for next 12 months, remaining of FY 2024 should be ok unless CPO price move above RM4200. I'm more concern about next year Q1, Hari Raya n CNY in same Q. They might incur hedging loss again. 27/04/2024 10:04 AM JrWarren Everybody who owned palm oil stock long enough know that the production output has SEASONAL factor. It is right to compare output and revenue for the same period (1Q2024 vs 1Q2023), but comparing this quarter (1Q2024) vs last quarter (4Q2023), confirm will get negative result due to the above Seasonal factor. On the other side, if comparing a company WITHOUT seasonal factor (ie real estate, petro, electricity ...), I will compare last Q with this Q. I give less concern on the hedging part because the contracts are sold with fixed amount, UP has budget to deal with it and forex hedging contract in place. If the CPO went above contract price, I use my own crops for production; if below contract price, I buy cheaper crops at spot price for production. Until I fulfilled all my delivery contract. Forex hedging just to lock on exchange rate for easy budgeting and forecast the profit. What stakeholder should concern is current order book, monthly production and CPO price. 27/04/2024 12:57 PM Sardin My findings: Good weather makes more good to efficient plantations than mediocre plantations. Bad weather makes more damage to efficient plantations than mediocre plantations. Pray for good weather. 27/04/2024 1:20 PM observatory @ooihk, what are the implication of Hari Raya and CNY on the same quarter, and by how much? 27/04/2024 5:05 PM observatory @JrWarren, The 20% QoQ production decline in 1Q24 (versus 4Q23) cannot be explained by seasonality alone. From historical first quarter perspective, 1Q24 output of 55k MT is probably normal. But 4Q23 output (70k MT), and in fact 3Q23 output (80k MT), are EXCEPTIONALLY high. I draw this conclusion from the published production data. On YoY basis, 4Q23 and 3Q23 have recorded 15% to 16% increase. Quite unusual. Own CPO (MT) Quarter YoY 55,446 1Q24 3% 70,149 4Q23 15% 79,641 3Q23 16% 62,295 2Q23 -7% 53,888 1Q23 -7% 60,851 4Q22 10% 68,942 3Q22 -4% 66,731 2Q22 0% 57,866 1Q22 -1% 55,474 4Q21 5% 71,449 3Q21 6% 66,460 2Q21 6% 58,217 1Q21 -2% I wonder if the 2H23 output surge is an aberration. 27/04/2024 5:05 PM observatory Does UP refinery use own crop when CPO price is high, and use 3rd party crop bought at spot price when CPO price is low? With due respect, I doubt it works this way. If the refinery uses 3rd party crops bought at spot price on a large scale, what will its plantation business do with own crops? If they sell their own crops, it’s still at spot price. If they stock them up on a large scale waiting for better prices in the future, it will be speculation which is against their purpose of hedging in the first place. Besides it’s also unclear to me for how long the produce stocks can be kept in inventory. In fact, as deduced from the balance sheet, UP keeps not more than half of a month of produce stocks. 27/04/2024 5:08 PM observatory @Sardin, refer to your statement. Do you mean that 2H23 was good weather and therefore it was exceptionally good for UP? BTW do you study and compare against production data of other plantation companies? If yes, mind sharing the summary of your data? 27/04/2024 5:26 PM Sardin Hi Observatory, the extraordinary dip of production in Feb 2024 was likely due to El Nino. But rainfall improves in Mar. That's not the explanation from UP, but my own belief based on info collection from various references. Exceptionally good 2H23 (vs year 2022) was mainly due to resolve of labour shortage. 27/04/2024 5:36 PM Sardin Please recall excessive heat started quite some time before FEB 2024 and so the effect manifest in FEB 2024. 27/04/2024 5:39 PM observatory Yeah labor availability would help. So is uplift in productivity. The Annual Report mentions that UP Malaysia now runs its operation with 10% lower workforce despite 9% larger land bank as compared with pre-Covid period. Quite amazing. 28/04/2024 2:45 PM Sardin This effect of productivity improvement thanks to mechanization is a common phenomenon among large plantations (such as IOI & Sime Darby), not UP alone, if you follow the news. 28/04/2024 4:43 PM observatory I see. I don’t follow other planters in details. However, when I tabulate the CPO yield per hectare of several large and mid-size companies like IOI, Simeplt, KLK, Kim Loong and Innoprise, they’re still about the same or below 2015/16 level. UP is the only one which has made sustainable gain due to improving FFB yield. 28/04/2024 8:21 PM ooihk899 UP has technical people as research director sitting on the board. Others dun have. That's the difference. 28/04/2024 8:29 PM observatory Yeah. UP is proud of its research. Looking at the UP Group CPO Yield chart, the UP Group yield has widened its lead over Malaysian average since 2016, which is a year with severe El Nino impact. I suspect one of the reasons is the low CPO price during mid 2010s discouraged other companies from investing while UP ploughed on. The difference only showed up years later. 28/04/2024 8:35 PM BudiLee Wow today is a good movement. Do you think by the end of tomorrow UP will surpass 26? 09/05/2024 2:08 PM ooihk899 Wow!! April production YoY up 14%, YTD up 5.7%. against 2023. Hopefully profit will also be all time high. 😁🤑 Looks like Tanarata production go into full swing now.😄 10/05/2024 5:31 PM observatory CPO production for Apr 23 was exceptionally low at 18k MT. Output for Apr 22, 21 and 20 were much higher, in the range of 21k-23k MT. In fact higher than Apr 24. 11/05/2024 12:35 AM ooihk899 Weather in 2023 n 2024 are El Nino, 2020,2021,2022 are La Lina. Production qty definitely different. 11/05/2024 10:29 AM observatory It’s possible. However, the overall YoY trend is like this 1) decline in 1H23 2) increase in 2H23 3) decline again in Jan-Feb 24 4) increase in Mar-Apr 24 If 2023-24 was adversely affected by El Nino, UP should not have enjoyed bumper crops in 2H23. But they did as 2H23 CPO output was 156k MT vs 2H22 135k MT, i.e. +15% YoY. More likely multiple factors were at work. Labor arrival in 2023 as suggested by Sardin played a part. Maybe local weather condition too. Biological resting phase once mentioned by the management may have also skewed the data. The Tanahrata replanting during 2019-21 should have started to contribute. However, from the overall group perspective, the contribution should be gradual without any step change. For the past number of years, typically 1000+ ha is replanted each year -- except 2,444ha in FY19 after Pinehill/ Tanarata acquisition; and 462ha in 2022 probably due to labor shortage. So improvement due to high-yielding seeds should happen all the time but gradually. In short, I can’t figure out any specific factor leading to the up and down in output. But without doubt, the continuous replanting regardless or market conditions will steadily lift output over the long term. 11/05/2024 4:51 PM BudiLee Have a good rest, everybody, because tomorrow we all are receiving the Payment from UP yeay .. payment day is tomorrow. 13/05/2024 11:18 PM  Pinky Divvy received. Thank you our darling United 😘 Not the United at Old Trafford though 😂🤣 14/05/2024 10:15 AM Pinky Don't get me started on another tirade on the pointlessness of bonus issues... 16/05/2024 2:52 PM dam82 it's time to celebrate with the world Probably The Best Beer :) .... enjoy the ride ... 16/05/2024 4:24 PM GS Minutes of the AGM 24/04/2024 https://unitedplantations.com/wp-content/uploads/2024/05/Minutes-of-Meeting-24-April-2024.pdf 21/05/2024 7:26 AM BudiLee Yes, thanks GS for the minutes. So in conclusion, continue to buy and keep UP share? 22/05/2024 11:20 PM Peace99 My guess is some ppl are willing to sell to switch to the more exciting counters at the moment :) 23/05/2024 11:18 AM Tanleechoo U c those gurus comes out again to sell classes .. Mkt is hot for fast money .. but will back same again 23/05/2024 11:26 AM  | |
