Investor on the Street

HSPLANT (5138): Palm Oil. No Debts. No Worries?

Effulgence
Publish date: Sun, 24 Jul 2022, 05:00 PM

HSPLANT (5138) is a Main Market company which is in the Plantations segment. 


HSPLANT is a lesser-known oil palm company compared to KLK, TSH, BPLANT, etc.

Its plantations are 100% in Malaysia, mainly based in Sabah. It is mainly in upstream of oil palm chain.

It is 71.57% owned by Hap Seng Consolidated Berhad.  

It is net cash, having zero debt. (like CHINTEK, INNO, etc. )

 

Is HSPLANT selling at cheap price now?

 

1. Share price you pay now is less than Net Asset per share. 

HSPLANT's share price is RM 2.17, whilst its net assets is about RM 2.33.

 

2. Best business performance this year may have been reflected in share price.

HSPLANT's revenue & profit was highest this year (FY 2021), where highest share price was April 2022. 

Investors may sense that profits have peaked, and revenue & profit could go down from now onwards.

 

3. Consecutive Positive Net Cash generated from operations since June 2018. 

HSPLANT is a proven strong cash-generating company, consistently having positive net cash from operations.

 

4. Chairman bought shares; Major Shareholder disposed shares.

Chairman Dato' Mohammed Bin Haji Che Hussein purchased shares from open market at RM 2.73 & RM 2.706

Major Shareholder Hap Seng Consolidated Berhad disposed shares from open market since May 2022.

Not much can be deduced from mixed signals.

 

5. Some Publicity.

HSPLANT has some publicity. The blogger mentioning HSPLANT may only be Calvin Tan.


6. Volatile earnings.

Revenue from FY 2017-FY 2021 was 555M, 391M, 419M, 468M, 671M.

Profit from ‚ÄčFY 2017-FY 2021 was 109M, 29M, 31M, 90M, 224M.

 

In times of high inflation, commodities like oil palm are a better hedge. No debts means rising interest rates can't harm you. HSPLANT has both advantages.

But oil palm companies like HSPLANT are easily affected by weather, fertiliser cost, labour shortage, CPO price.


I don't have shares in HSPLANT. Looking forward to buy this zero debt net cash commodity company when share price is under RM1.82 for margin of safety.


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