Wall Street KLCI

HARN LEN worth RM1.80?

Wall Street KLCI
Publish date: Tue, 01 Oct 2013, 10:37 AM
Wall Street KLCI
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THIS BLOG IS RELATED TO OBSERVATIONS REGARDING STOCKS TRADED IN MALAYSIA. DISCLAIMER: THE COMPANY ANALYSIS THAT APPEAR IN THIS BLOG IS MERELY FACTS GATHERED FROM DIFFERENT SOURCES AND THE AUTHOR'S PERSONAL VIEW. IT IS NOT A BUY OR SELL RECOMMENDATION. THE AUTHOR DO NOT GUARANTEE THE ACCURACY OF THE FACTS BEING PRESENTED. PLEASE CONSULT YOUR INVESTMENT ADVISORS BEFORE ACTING ON ANY INFORMATION PROVIDED BY THE ANALYSIS ABOVE.
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1.    The price that it sold its land is already RM1.00 per share. On 27-Sep-2013, Harn Len Corporation (HARNLEN) sold its 2410 ha of land in Sabah for RM184.6m cash to Boustead. If you look at the share base of 185.5m, the cash of RM184.6m translated into about RM1.00 per share. Since this Company still owns 12,200 ha of plantation land in other states, its share price is unjustifiably trade near RM1.00.
2.     Will HARNLEN sell its other plantation estates? HARNLEN has suffered consecutive 3 quarter of net losses due to low CPO prices, so it may make economic sense that the owner may want to sell its estates to another Company to realize its investment.
3.       HARNLEN is worth RM1.80 if the estates were to be sold. Assuming a very low land valuation of RM25,000 per ha for the remaining 12,200 ha of its land, this share is easily worth RM1.80. The 12,200 ha of land is already at deep discount of 65% to the Sabah estate price (due to the low FFB yield) in this calculation. This means its 12,200 ha land worth RM305m or RM1.60 per share. But of course we need to take care of its net debt of RM148m or RM0.80 per share.
4.    Conclusion: Land sold at cash (RM1.00) + Remaining estates (RM1.60) - Net Debt (RM0.80) = RM1.80 per share.
5.     Short term will be volatile, but the value should emerge soon. Investors sentiment may be clouded by US Government Shutdown Concern, but value investors know the trick to buy when the market is in fear. Grab this opportunity before too late.

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Discussions
Be the first to like this. Showing 2 of 2 comments

twim

Agree if the owners sell off all their land or if they do a re-evaluation of their assets. Then NA maybe adjusted to > rm3 actually..wif present sale NA is already at rm2.13. My 2c is when share price was at 75c, NA is rm1.36...after sale, NA is rm2.13 meaning the share price should be at rm1.20 minimum now.

2013-10-01 12:09

tonylim

..

2013-10-02 01:27

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