The Plantation Themed Stock that Deserve More Attention

Publish date: Fri, 23 Feb 2024, 12:30 PM

Muar Ban Lee Group Bhd (MBL)
, a well-known plantation themed company in Bursa Malaysia, recently has caught my attention as a very interesting company amidst the sea of investment prospects, particularly for its proactive approach in the palm kernel oil sector amidst the uncertainties of El Niño.

This weather pattern, worse known for its disruptive impact on agriculture, poses a significant challenge, especially in key palm oil-producing regions like Malaysia and Indonesia. However, MBL’s roots in the technology and its foray into the biogas sector suggest a robust framework for navigating these challenges, making it a noteworthy consideration for my investment watchlist.
Let us delve deeper into the topic today.

The variability of El Niño’s impact on crop yields, particularly for palm oil, is a concern for the industry. Yet, the presence of factors such as labour force and mature plantations may offer some mitigation. Despite mixed forecasts on palm oil production for the upcoming year, there’s a cautiously optimistic outlook for Malaysia’s production capabilities, which could bode well for companies like MBL.

  An anticipated uptick in palm oil prices, influenced by global policy shifts and demand dynamics, notably from China, adds another layer of potential for MBL. These market conditions could potentially enhance the revenue from MBL’s core operations of enhancing efficiency yield in palm kennel processing, which is inline with the company’s strategic initiatives in palm kernel oil processing and biogas production.

The move towards biogas is also interesting. It not only diversifies MBL’s revenue streams but also aligns with the global momentum towards renewable energy sources. This venture could mitigate some of the risks tied to traditional palm oil markets and the potential production volatilities brought about by El Niño, further strengthening MBL’s position as an investment prospect.

Diversification is another key aspect of MBL’s strategy, with ventures into the automotive sector and plantation investments broadening its business scope. This multifaceted approach underpins MBL’s potential for sustained growth and resilience, further validating its watchlist-worthy status.

The valuation of MBL, particularly when contrasted with its net asset value of 95.0 cents compared to the current share price of 43.5 cents, suggests an undervaluation that piques my interest as an investor. Coupled with the company’s historical propensity for consistent dividend payouts pre-pandemic, there’s a tangible appeal for potential future returns.

However, the looming El Niño presents a variable that necessitates close monitoring, given its potential implications for palm oil production and, subsequently, MBL’s performance. The company’s ability to leverage its strengths and adapt to these challenges will be crucial in affirming its place on my investment watchlist.

Now, do you why MBL remains in my investment watchlist?

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