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Author: Koon Yew Yin   |   Latest post: Tue, 27 Jul 2021, 2:22 PM

 

How to become a super investor?

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Koon Yew Yin - 1st Nov 2013

As you know, there are several share selection criteria such as P/E ratio, dividend yield, NTA, cash flow, price to book value etc. Almost all professional fund managers and ordinary investors consider P/E ratio most important. As a result, they miss out to buy companies with poor current earnings but have tremendous profit growth potential.

Statistics show that this kind of investors cannot outperform the market index. Records show that in the last 10 years, 76% of professional fund managers and most day traders cannot outperform the market index, because they concentrate too much on current earnings and do not look at the future profit growth of the companies. They are very shortsighted.

As you know, palm oil price, like most commodities, moves in a cycle. It has been depressed for about 2 years and it is beginning to turn around. CPO price has increased by Rm 50 per tons yesterday. As a result all plantation companies show poor current earnings and most fund managers and the average investors are not interested to buy them. That is why their share prices are so cheap.

In my opinion, I consider the most important share selection criterion is profit growth prospect.

After having said that, you must also understand the plantation industries. It takes about 1 or 2 years to clear the forest before planting. The palms will only start to bear fruits after 4 years of planting. Moreover, in the early stage of fruiting, the quantity is so little and it is still not profitable. It is will only begin to show profit when the palms are 5 or 6 years old, ie more than 7 years from the time of forest clearing. But palms will continue to bear fruits even when the palms are more than 25 years old.

If you look at the world map, you will notice that two small countries, Indonesia and Malaysia produce more than 90% of palm oil. Fortunately, our biggest buyers China and India cannot grow oil palms. Moreover, oil palms can produce eight times more oil than soya beans per hectare.

According to recent study, due to the increase of population and economic advancement, an additional 6 million ton of eatable oil is required annually. Where can they find so much additional land to plant soya beans?

The American smear campaign that soya oil is better than palm oil is proven to be untrue. That is why according to the US Food safety regulations, all potato chips cannot be fried with soya oil.     

Jaya Tiasa Profit Growth Prospect

Basing on the Jaya Tiasa’s planting programme and the FFB production at various age of the palms as shown on the charts below, I have calculated the FFB production for the current year 2013 which is 675,000 ton and in 3 years time 2016, its production will be 1,225,000 ton.

 

 

 

Palms older than 10 years old, I assume conservatively that it can produce 30 ton per ha.

Year      Ha Planted    2013 age    FFB produced         2016 age            FFB produced  

2002     1000               11               30,000 ton                       14                30,000 ton         

2003     1,000              10               27,200 ton                         13               30,000 ton         

2004      2,500               9               58,500 ton                         12                75,000 ton         

2005      3,500               8               75,300 ton                         11               105,000 ton       

2006     7,000               7                130,002 ton                       1 0               190,000 ton       

2007     7,500              6                 123,000 ton                          9               175,000 ton      

2008     12,000            5                 144,000 ton                          8               258,000 ton        

2009     9,000              4                 69,300 ton                            7               167,000 ton        

2010     7,000              3                   ---                                          6               115,000 ton         

2011     4300               2                  -----                                         5                 52,000 ton          

2012     3,700              1                  ----                                          4                 28,000 ton            

2013     3,700              0                    ----                                        3                  ----               

Total   62,200 Ha                       657,000 ton                                             1,225,000 ton 

Good profit growth prospect

In 3 years time  the production will be increased by nearly 90 % and the profit will be increased a lot more because the cost for producing the additional FFB is only for additional fertilizer and labour for harvesting which are relatively small.

Undervalued

On 27th Sept 2013 Boustead made this announcement:

BOUSTEAD HOLDINGS BERHAD (“BHB” OR “COMPANY”) PROPOSED ACQUISITION OF TWO (2) PIECES OF OIL PALM PLANTATION LAND IN DISTRICT OF LAHAD DATU, SABAH MEASURING APPROXIMATELY IN TOTAL 2,409.8 HECTARES BY BOUSTEAD RIMBA NILAI SDN. BHD, A WHOLLY OWNED SUBSIDIARY OF BOUSTEAD PLANTATIONS BERHAD, WHICH IN TURN IS A WHOLLY-OWNED SUBSIDIARY OF BHB FROM UNIGLOBAL SDN. BHD. (“UNIGLOBAL”) FOR A TOTAL CASH CONSIDERATION OF RM184,596,825 (“PROPOSED ACQUISITION”)

More recently IOI has announced that it is buying Harn Len Corporation’s plantation at about Rm 79,000 per ha.

Boustead is buying the plantation at Rm 76,598 per ha. Basing on this rate JT’s 62,200 ha is worth Rm 4.76 billion while its market cap is 974 million issued shares X Rm 2.14 = Rm 2.08 billion.

Timber Business:

How do you value its timber business, one of the largest if not the largest in Malaysia and its large forest concession which is about 2400 square kilometers?  

The price has been depressed for more than a year, since the bonus issue of 2 for every one share held. A few long term investors bought 15% of the total issued shares at Rm 7.90 per share before the bonus issue which is equivalent to Rm 2.63 per share. The closing price on 31st Oct was Rm 2,13.

I am obliged to tell you that Jaya Tiasa is my major investment and I am not asking you to buy it.

Koon Yew Yin

                                                           

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Labels: JTIASA

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Chart Stock Name Last Change Volume 
JTIASA 0.635 +0.005 (0.79%) 371,700 

  8 people like this.
 
messi CPTeh blog : Mr Koon with the invited guests

http://klse.i3investor.com/blogs/cpteh/40730.jsp
10/11/2013 11:21 PM
ProfitMan Fortunebull, I totally agree with you. I am a strong believer and practitioner of the FA + TA. Lately, I hear a lot of people with a lot of tips on shares pushing up to certain price levels and stuff like that. Once this happens, we need to be very careful of the market. Reminds me of the big KLSE stock market crash.
11/11/2013 10:47 AM
andychucky28 This coming two years will be the equity market. Property market is already slowing down.
11/11/2013 2:15 PM
Winnie 真爱要等待
12/11/2013 10:44 PM
heavyth Why sell down...by whom..any comments..???
30/12/2013 7:24 PM
Koon Yew Yin Why and who would sell so aggressively in the last few days? When I posted this article, the price of Jaya Tiasa was Rm 2.13 on 1st Nov. and it shot up to above Rm 2.50 and it closed at Rm 2.05 on 30th Dec.

I think a professional fund manager whose book value of his portfolio is showing too much profit and he wants to depress the price of JT so that he can have an easy start for 2014. In any case, you can see for yourself that JT is so ridiculously under valued. Just basing on the market price of Rm 70,000 per hectare for oil palm plantation X 62,500 ha = Rm 4.375 billion which is more than twice of JT's market capitalization.

Let me elaborate on its plywood and timber business. JT has almost unlimited log supply from its own forest while manufacturers from India, China, Taiwan and Japan have to buy & import logs, most probably from JT. Remember JT is one of the largest plywood manufacturers in the world and with its competitive advantage, it will generate sustainable profit for a long time. Currently it is not showing much profit because JT has been using its money from its timber business to plant oil palms aggressively.

I consider JT is my best bet which I will continue to accumulate. After blowing so much about JT, my reputation is at stake. Where can I hide my face if JT remain depressed below Rm 2?
Koon Yew Yin
31/12/2013 8:05 AM
avucin Post removed. Why?
31/12/2013 8:14 AM
Koon Yew Yin Avucin, although I do not know you, your comment shows that you have no manners, you do not understand what I wrote and you have a very poor track record. You are crude and you will be a failure in life. Please google my name so that you know more about me.

I will increase my borrowing to buy JT as you can see the big block currently queuing to buy. To be really successful, you must not be afraid to buy when the share goes lower than you originally started to buy if the reasons for buying have not changed.
31/12/2013 9:50 AM
datuk Dear Mr. Koon,

Could you elaborate further on the money made in timber plywood being channelled to palm pil plantation?

Would appreciate very much for yr worthy effort.
31/12/2013 9:57 AM
Lim Yap Thank you Mr. Koon for your kind sharing. Really appreciate that.
31/12/2013 9:57 AM
smartly my respect to you. u walk the talk. salute.!
31/12/2013 10:14 AM
bsngpg Mr Koon : Judging with my understanding on basic human behavioral science, I have full faith on your personal integrity. Even though I am still bleeding on JT, I deem it as my own responsibility and you have my fullest respect. Wishing you a good health. Happy new year.
31/12/2013 12:09 PM
zizoudoremi If you start blaming anyone when your share going down, you should just sell your share immediately as you are not suppose to purchase it in the first place.
31/12/2013 3:03 PM
ckleow79 Dear Mr. Koon,

I agreed with how you value the JT. however, JT have a unfavor record that many speculator interested JT. but MR koon, you r long term investor therefore nothing favor to you even the up/down of the price in short term.

as a small investor i sold all the units and will be reaccumulate after it down to RM2.

happy new year. happy trading.

hope next time i have a chance to meet you and listen to your investment methodology.

Thank you for your contribution.
I always believe : "the more you sharing, the greatest return you have".
(superb networking)

from CK leow
31/12/2013 4:11 PM
esy33 Hi Mr Koon,
I bought Jaya Tiasa way back in 2006. Bought as timber was among the last commodity to go up after iron ore, crude oil and palm oil.
Had relied on International Tropical Timber Organization newsletter to monitor log prices in Japan & Sarawak (so that i would know the price before it being published by any brokerage houses). Bought it because log & plywood prices was beginning to creep up, & around Sarawak State Election in which Sarawak counters tend to rally.
JT was selling for RM3.2 per share (before the year or 2 ago split/rights issue). I sold it for ~RM3.8 and netted me my 1st 10k from the market.
I did notice that in their annual report at that time, of them owning 80k hectares of land (plantable ~70k hectares). They were planting at the rate of almost 10k hectares per year back then. No other Malaysian company that i know of were planting at this aggressive rate.
However, I also noticed that JT should be producing more plywood and logs as compared to Ta Ann. But JT always makes lesser profit as compared to Ta Ann.
Also there were lots of related party transactions in JT operations.
Also, JT's annual profit is volatile as i can recall at that time.
That is the main reason i sold in 2007/8 ( can't recall exact year).
Only just before its rights issue, did the profit perked up and then it fell back after that.
Also, a year or two back, there was this occurrence of large quantities of logs to got out of log ponds up stream that flowed into the sea.
But it was not reported the logs were from which listed timber company.
None of the listed timber companies (that i know of, but i never did an exhaustive search) booked the loses.
Plus (with apology) who knows exactly how much timber that is really extracted in the jungle ?
That doesn't help when JT's annual profit was not consistent at that time. Never really checked JT recent quarterly announcement.
But if JT's profit is more stable, plus dividend then only its stock price will go up.
Also, isn't it that there is just to much additional acreage being added by plantings from 2006/7 ? Each year there would be more acreage added in Indonesia ?
Also, Sarawak land is mostly peat land ? It is less fertile ? Is this the reason (aside from transportation) why Sarawak land is the last to be developed into palm oil estates ? Sabah shares the same problem of transportation, but IOI chose Sabah as its land is fertile and hence a lower cost producer ?
01/01/2014 9:29 PM
KCLoh At least Mr Koon stood by his recommendation! Not like KC LOH aka Mr SKPRESS! Gooner! WAKAKAKAKAKA!
01/01/2014 9:32 PM
OTB Dear Mr Koon,
1.98 to 2.04 are very strong support level. I still think that the stock price is almost bottom. Down side risk is very small now.
Please do not worry, the price will not drop a lot again.
Wishing you a "Happy and Prosperous New Year 2014".
Thank you.
01/01/2014 9:53 PM
KC Loh post removed deliberately not to show-off like someone in liihen and instaco and caught with pants down! LOL
01/01/2014 9:57 PM
Koon Yew Yin I walk the talk, meaning I do what I say. My wife and I bought more than half of the 8 million JT shares traded on 31st Dec 2013. I have not seen such huge volume of JT shares traded before. It looked like a big fund wanted to sell before year end.

I wish someone can tell me the reason why would anyone sell so aggressively as if he could not sell in 2014. Even if he wants to sell, he should not sell so aggressively to get a better price. JT price dropped 16 sens in the last 3 trading days.

I put my money where my mouth is. I will continue to borrow more money or sell my other holdings to buy JT if its price continues to drop. To be a super investor, one must not be afraid to buy when its price has dropped much lower than when one started to accumulate it, provided the reasons for buying have not changed.

For the same reason my family members and I bought about 20 million Sarawak Oil Palm shares (as shown in SOP 2011 report) when its price was about Rm 3.00. The price was so cheap because their palms were young and as a result the profit was not attractive. SOP is now trading around Rm 6.50 and I sold almost all my SOP to buy JT.

In 2 or 3 years time, I strongly believe JT will double its price, like SOP. As much as I regretted in publishing this article, I am obliged to respond to commentaries. Again I am not asking you to buy JT.

Best wishes for 2014
02/01/2014 4:30 AM
Lhchew Mr. Koon,

This is first time I'm writing in i3invetor forum, though I have been following your blog here & Malaysian finance.

High respect for you for being such as honorable man, can be seen on how you handle this case including past event such as donation to UTAR issues years ago.

Don't be disheartened by doubters who are in the minority.

Best wished to you & family in 2014.
02/01/2014 2:17 PM
heavyth Honourable man Mr Koon Yew Yin..Happy 2014...!!
02/01/2014 2:34 PM
wmliang Hi mr koon, thank you for your sharing.After read your article, i very confident to buy this share and now Jtiasa become my major investment in my share profolio.
i also interest to buy TSH because their tree age <7 year is around 77% and have very potential to grow,what is your opinion?
04/01/2014 12:44 AM
Ricky Kiat Mr koon, if jtiasa compare with Ta an?
06/01/2014 1:24 PM
Koon Yew Yin I sold all my Ta An, SOP and R Sawit to buy Jaya Tiasa because JT has better profit growth prospect. JT sells more plywood, logs and has much more oil planation than Ta An. R Sawit has less planted oil palm area and it has no plywood and timber business. When I bought SOP about 3 years ago, it was selling around Rm 3 and now it is selling more than Rm 6.
You buy JT at your own risk.
Koon Yew Yin
06/01/2014 2:58 PM
Ricky Kiat thank a lot Mr koon. i will handle the risk, no risk,no gain.
06/01/2014 9:00 PM
Ricky Kiat Mr koon ,before read your article,i thought that best oil palm stock must have very very large land bank ,so we must keep it for very long term(10 - 20 year) to wait those land fully planted & wait the value come out. Now my mind are more clearer bcos finally i realize that i must count the average age of oil palm tree to know % grow of FFB. More FFB mean more ROI .
First time i buy a oil plam stock bcos of Mr Fong Si Ling,he highly recommend us to buy oil palm stock bcos of speciality of it. No other stock can compare with oil palm stock bcos value of land grow every year & become scarity . i plans keep oil palm stock for my future retirement & my kids education fee.
07/01/2014 9:16 AM
Ricky Kiat Mr koon,i am fresh about to use margin finance, can u tell me more detail ?

1)wheather now is right time to use margin finance ?or wait until economy crisis or KLCI fall to below 1400 ?

2)wheather i must choose the share have over 6% dividen return bocs i need to repayment the loan every month.

3)how to diversify our portfolio ?should we keep some defensive stock(good dividen stock) & use only margin finance to buy very good grow prospect stock?
07/01/2014 2:41 PM
Ricky Kiat Mr Koon , u prefer use margin finance to buy oil palm stock , bcos of predictable grow profit & speciality ?am i right?
08/01/2014 8:27 AM
wmliang sibu Severe flood last month... jaya tiasa 80% palm oil over there..

http://www.investalks.com/forum/viewthread.php?tid=8056&extra=&page=9

page 9


发表于 2014-1-13 20:43 | 只看该作者
我刚发现砂捞越州发生水灾。诗巫也遭殃了。常成有很多棕油地都在诗巫。

我的消息都是来自这两个网站http://sibuericluk.blogspot.com/
和http://www.seehua.com/news/sarawak/middle?page=24

有谁住在诗巫的?可以分享那边的境况吗?
flood 1.png (354.19 KB)

flood 1.png
flood 2.png (159.31 KB)

flood 2.png
13/01/2014 23:40
13/01/2014 23:43
13/01/2014 11:57 PM
Koon Yew Yin Fortunately the flooding in Sibu will be over in a few days. Flooding will not be there forever. When weak JT holders sell because they are afraid of flooding, clever investors should buy.
13/01/2014 11:59 PM
wmliang Thank you mr koon sharing, you give me more confident to accumulate this share,thank you very much...
14/01/2014 12:05 AM
wmliang Dear Mr Koon

Brazilian Amazon contains an estimated 850,000 square miles (15 times size area malaysia + indonesia )suitable for palm oil plantations — an area four times the size of France. By comparison, Indonesia and Malaysia, which account for nearly 90 percent of global palm oil production, have less than 50,000 square miles of oil palm under cultivation.

If barazil aggressive to expand their palm oil business in future,
crude palm oil will over supply? Plantation share still can keep for long term?

http://e360.yale.edu/feature/in_brazil_palm_oil_plantations_could_help_preserve_amazon/2415/
14/01/2014 12:59 AM
Koon Yew Yin I must admire wmliang's enquiring mind. First he warns us about the flooding in Sibu where Jaya Tiasa's plantations are located and now he warns us about Brazil's large land area if fully planted could be a serious competitor to the palm oil industry in Indonesia & Malaysia.

As I said earlier the flooding would only last a few days and its effect would be very small.

Regarding Brazil's comparatively large land area, I google to find out its palm oil production capacity. Although Brazil large rain forest seems suitable for oil palm cultivation, according to 2013 statistics it produced 340,000 tons while Indonesia produced 31,000,000 tons and Malaysia produced 19,200,000 tons.

Like all industries, it is not so easy to grow oil palms and produce palm oil economically to compete in the world market. There must be numerous obstacles to overcome, such as rainfall, climate, soil type, accessibility, cost of labour, fertilizer, finance and many other factors.
14/01/2014 6:54 AM
wmliang Thanks Mr koon
14/01/2014 8:36 AM
Koon Yew Yin It is important to point out that the success of any industry, enterprise, business, investment or venture depends largely on the people. If you look at the top 10 richest men in Indonesia and Malaysia, you will find that most of them are ethnic Chinese because they have all the essential qualities as entrepreneurs. I am saying this with good intention and without disrespect to the other races.

I must also point out that the Chinese should be grateful for the opportunities given to them by their Governments and they must remember to do charity because when they die they cannot take money away with them.
14/01/2014 9:45 AM
sunztzhe Mr Koon,
Chedet had stated that
-The Malays must remember that they cannot rule and prosper this country on their own.
-They need the dynamism and business skills of the Chinese. They need also the professional skills of the Indians.

Having said that, a more pertinent question to ask is "Are Schools educating our child for the real world, the real world of money, arming our child with basic financial education?"
14/01/2014 10:12 AM
Koon Yew Yin Sunztzhe: I appreciate the honest expression of your feeling. This is not the right forum to discuss politics. I have written many articles regarding our Malaysian Education system, BN's wrong doings etc which you can read if you google my name. Happy reading
14/01/2014 11:17 AM
sunztzhe Mr Koon: Politics as defined by Wikipedia (from Greek: politikos, meaning "of, for, or relating to citizens") is the practice and theory of influencing other people on a civic or individual level. More narrowly, it refers to achieving and exercising positions of governance — organized control over a human community, particularly a state.

So on a much broader view, the forum on "How to become a super investor" is political as well.
14/01/2014 1:13 PM
Koon Yew Yin Wah! sunztzhe is really clever. I like to meet up with you. I am sure we have a lot of things to discuss besides investment. Please come to my talk on 18th Jan at 10.30 am -12.30 pm at the Ipoh YMCA. Alvin Tai CFA of RHB Institute research and I will be talking about the prospect of the palm oil industry. Of course, we will also touch on Jaya Tiasa. Like all commodities, the palm oil price moves in a cycle. After its price has been depressed for more than a year, it is beginning to move higher. This is the best opportunity to buy palm oil company shares.

If you look at The Star online today, you will beside Alvin Tai, there 3 other experts writing about the CPO price up trend.
14/01/2014 2:53 PM
eric8168 mr koon i agree with u. When the talk will be held at penang ? i will miss the boat this time.
15/01/2014 2:41 PM
Koon Yew Yin eric8168, you can come to Ipoh YMCA this Saturday 18th Jan 10.30 am - 12.30pm to attend my talk with plantation expert Alvin Tai of RHB research. I purposely fixed at 10.3 am so that out station people can easily make it if they are really interested.
15/01/2014 3:37 PM
wmliang ( Yield drag : Timing the entry into growth stock
yield drag factor for Jtiasa CY13 = 65.8%, CY14 = 56.5%, CY15= 37.2%
by plantation expert Alvin Tai of RHB research )

what is the meaning of Yield drag? Anybody can help me?
18/01/2014 11:20 PM
Koon Yew Yin wmliang, Alvin said that JT's yield drag factor as you quoted above is improving quite rapidly. Yield Drag is the measure of the young unproductive palms to its total planted area in term of percentage. If I am not mistaken.
19/01/2014 7:51 AM
wmliang thanks Mr Koon
20/01/2014 1:13 AM
wmliang Wilmar to stop buying CPO fom Sarawak
February 14, 2014
Land Development minister James Masing said the livelihood of the people in the rural areas was not to be negotiated with the international community
KUCHING: Sarawak may lose some RM400 million in sales tax revenue a year from oil palm products following the decision of a multinational refinery company’s refusal to buy crude palm oil (CPO) from mills in the state.
A Singapore-based company, Wilmar International Limited, which has its refinery plant in Bintulu, has written to the state government to inform that the company would stop buying CPO produced from oil palm trees planted in forest areas and peat swamp land in the state from 2015 onwards.
15/02/2014 1:43 AM
Koon Yew Yin Remember Wilmar is not a charity organisation. Its agenda might be to depress CPO price so that their refineries can make more profit.

Please read my previous articles namely 'Fight the smear campaign against our palm oil industry' and ' They cut down their thousand year old trees and now say that we are wrong to cut our forest to plant oil palms'
15/02/2014 5:56 AM
Buddy Fat Cat kikiki.. ow.. then whats your agenda? kakagarkgark...
15/02/2014 6:31 AM
Koon Yew Yin Seminar at 11am on 16th Feb Sunday at Ipoh St John Ambulance hall. I have rearranged the seating, now I can offer another additional 40 seats, totalling 220 seats. Those who are interested can write to me, especially those whom I have turned down. koonyewyin@gmail.com.
15/02/2014 12:08 PM
wmliang MONTHLY PRODUCTION FIGURES (MINING / PLANTATION / TIMBER)
JAYA TIASA HOLDINGS BHD

Type Announcement
Subject MONTHLY PRODUCTION FIGURES (MINING / PLANTATION / TIMBER)
Description The Company is pleased to announce that logs and crop production of the Group for the month of January 2014 are as follows:-

(1). Logs - 52,035 cubic metres.
(2). Fresh Fruit Bunches - 56,975 metric tonnes.
(3). Crude Palm Oil - 4,509 metric tonnes.
(4). Palm Kernel - 718 metric tonnes
20/02/2014 7:10 PM
timetokoon Seminar at 11am on 16th Feb Sunday at Ipoh St John Ambulance hall. I have rearranged the seating, now I can offer another additional 40 seats, totalling 220 seats. Those who are interested can write to me, especially those whom I have turned down. koonyewyin@gmail.com.
22/11/2015 10:26 AM


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