THE INVESTMENT APPROACH OF CALVIN TAN
A POWERFUL BULL RUN IN PALM OIL STOCKS HAS COMMENCED: CHINTECK FANTASTIC RESULTS SHOW THE WAY, Calvin Tan Research
calvintaneng
Publish date: Thu, 05 Nov 2020, 09:42 PM
calvintaneng
0 1,801
Hi Guys,
I have An Investment Approach I which I would like to all.
I have An Investment Approach I which I would like to all.
Hi guys,
We are now at the start of another Bull Trend: this time is Palm Oil stocks (Medical Glove bull run was triggered in April 2020 by Covid 19)
Floods, China Bread Basket of Heilongjiang, floods in maharastha the bread basket of India, drought in Argentina & Brazil have all converged into a Food Crisis & panic buy of Soybean - leading to Palm Oil going into Multi Year High
THE CAUSE OF MEDICAL GLOVE SUPERBULL IS COVID 19
AND THE CAUSE FOR PALM OIL BULL RUN IS LA NINA (TOO MUCH WATER IN CERTAIN PARTS & TOO DRY IN OTHER PARTS - LEADING TO PANIC BUY OF SOY OIL & PALM OIL NOW!)
As a result Palm OIl Prices Nov future has crossed Rm3,400 a tonne today
Since production cost is Rm1600 to Rm1800 (Average Rm1700 Palm Oil selling price is now up 100%)
Let's take a look at Chinteck Plantation result
SUMMARY OF KEY FINANCIAL INFORMATION
|
|
INDIVIDUAL PERIOD
|
CUMULATIVE PERIOD
|
||||
|
CURRENT YEAR QUARTER
|
PRECEDING YEAR
CORRESPONDING QUARTER |
CURRENT YEAR TO DATE
|
PRECEDING YEAR
CORRESPONDING PERIOD |
||
|
31 Aug 2020
|
31 Aug 2019
|
31 Aug 2020
|
31 Aug 2019
|
||
|
$$'000
|
$$'000
|
$$'000
|
$$'000
|
||
| 1 | Revenue |
39,155
|
30,055
|
129,813
|
122,120
|
| 2 | Profit/(loss) before tax |
17,725
|
8,128
|
47,241
|
42,221
|
| 3 | Profit/(loss) for the period |
13,715
|
6,524
|
35,987
|
32,103
|
| 4 | Profit/(loss) attributable to ordinary equity holders of the parent |
13,715
|
6,524
|
35,987
|
32,103
|
| 5 | Basic earnings/(loss) per share (Subunit) |
15.01
|
7.14
|
39.39
|
35.14
|
| 6 | Proposed/Declared dividend per share (Subunit) |
0.00
|
0.00
|
16.00
|
20.00
|
|
AS AT END OF CURRENT QUARTER
|
AS AT PRECEDING FINANCIAL YEAR END
|
||||
| 7 | Net assets per share attributable to ordinary equity holders of the parent ($$) |
7.4400
|
7.3600
|
||
Note: Revenue has increased from Rm30,055,000 to Rm39,155,000 or up 30%
But Profit has gone up from 7.14 sen to 15.01 sen or up a Whopping 111%
Why?
Answer: BECAUSE CPO SELLING PRICES HAVE JUMPED FROM RM2000 TO RM2700
And look again
SUMMARY OF KEY FINANCIAL INFORMATION
31 Aug 2020
CHIN TECK FANTASTIC 111% JUMP IN PROFIT WAS UNTIL 31 Aug 2020 (From June, July & August harvest when CPO was still around Rm2500 to Rm2700)
In September 2020 CPO has reached Rm2900
October 2020 it has crossed RM3000
As of Nov 2020 it has crossed Rm3100 and still powering up & up
So Chin teck September, October & until now 5th Nov 2020 results should be even far better as CPO has gone up another Rm400 a tonne. By Feb 2021 Chin teck will have reported 2 fantastic quarters of growth
When we studied Gloves performance early in April, May, June & July 2020 we expected to see Gloves earning more and more by increasing production an ASP
And we were Chun Chun on Supermax
Smack in the very heart of Glove Super Boom we bought Supermax at Rm1.73 & Sold above Rm18.00 for 1,000% profit
This was what happened in the year 2000 Dot Com Bull when MPI jumped from Rm5.00 to Rm50.00 (Up 1,000%)
Now how high & how far This Cpo Bull Run will depend on these Factors
1) To what extent 5 Major Floods have Wiped Off All China Maize & Soy-bean this year
2) To what extent Typhoon Haishen have wiped off the Corn & Soy Crop of Koreas & Japan
3) To what extent have many Typhoons destroyed the crops in Thailand & Vietnam this year
4) To what extent Hurricane have destroyed the crops of Greece, France & Italy
5) To what extent have Hurricanes wiped off the crops in Mexico & South-east USA
Drought
To what extent Drought has destroyed Soy beans in USA High Plains, Argentina & Brazil
The Cause of La Lina with Its World-wide Floods & Drought have destroyed both wheat, Maize & Soy-bean like never before
Compounded with MCO many nations have banned seasonal harvestors
A HUGE FOOD SHORTAGE HAS COMMENCED
JUST LIKE IN EARLY MONTHS OF MAY, JUNE, JULY & AUGUST THERE WAS AN ACUTE SHORTAGE OF MEDICAL GLOVES
BOTH FAMINE & COVID 19 ARE LIFE THREATENING
WHILE SUPERMAX HAS ALREADY SHOT UP BY MORE THAN 1,000% & IB BANKS ARE STILL NEUTRAL ON PALM OIL STOCKS NOW IS OUR OPPORTUNITY
Since we gave P/E for Medical Gloves shall also assign 30 P/E to Palm Oil Stocks (For Tech bloated stock prices they gave 50 P/E to 200 P/E)
So let's see
This quater Chun Teck earned
15.01 sen
Annualized 15.01 x 4 = 60.04 sen
If P/E 30 then 60.04 x 30 = Rm18.01
WAHAHA!
IS CHIN TECK WORTH RM18.01 (If we assign Top Glove & Supermax with 30 P/E why not Oil Palm Stocks?)
Of course Chin teck at Rm6.07 is still far from Rm18.01 as the market is still skeptical
Skeptical?
YESSS! THAT IS STILL TIME TO BUY
ALL IB BANKS AS OF NOW ARE NEUTRAL (SKEPTICAL) ON PALM OIL STOCKS
SO TIME TO BUY
For Medical Gloves they are now hovering between Optimism & Euphoria (so no longer cheap & so we have taken our profits (and great profits indeed! more than 1,000%)
Will Palm Oil give us another 1,000% profit??
No need
300% to 500% upside will do
Best regards
Calvin Tan Research
Disclaimer
All information provided here should be treated for informational purposes only. It is solely reflecting author's personal views and the author should not be held liable for any actions taken in reliance on information contained herein.
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Discussions
2 people like this. Showing 21 of 21 comments
Plantatio counters have started recovering from their low but too early to have a bullish buy. They have recovered from their year low and not on a hot streak. Counters like Rsawit or TSH have not hit their year high despite CPO is on roll at their 4 year high { hitting above 3,300 per tonne} Rsawit trading at 29 sen {against their high of 48} TSH manged to close at 1.02 { still far below this year high of 1.54}
2020-11-06 07:48
Yes same sentiment in March 2020 when Supermax fell to the low of Rm1.30
When wuhan virus started in Dec 2019 Supermax month high was Rm1.47
Those who bought Supermax at Rm1.47 and sold at cutloss price of Rm1.30 in March 2020 must have banged their head on the walls when Supermax reached Rm24.44 in less then 6 months
Same scene is now being played out in palm oil coming bull run
Many are still skeptical so we are very happy to take them while still cheap
2020-11-06 10:28
Typhoons Destroyed all China Crops
1.4 Billion people from China need lots of Palm oil
So they panic buy
See https://www.youtube.com/watch?v=2fpL-tGBuAI
2020-11-06 11:30
Some places got Typhoon, Cyclone & Hurricanes
Others plagued by Drought
https://www.youtube.com/watch?v=mmsbyfqYSng
2020-11-06 11:56
Calvintaneng :agreed with your reasoning but the main issue lies with palm { CPO } itself. It's not a price maker but it tends to correlate closely with SBO and other competing soft oils. Demand is seasonal and with Brent crude { Gas oil spread } trading at a big discount. Demand for biofuel will not be robust. Not viable to sustain the used of palm biofuel in the long run.
Nevertheless with the El nino or La nina production of palm may be affected. China and India holds the key. Hopefully, we can see better days and higher prices in the coming 3-4 months.
2020-11-06 20:54
From Nov 2020 USA Soybean harvest will be completed
Over in Brazil Hot Dry Weather delayed Soy-bean planting from Sept to Oct 2020
So there won't be Soy-bean for 3 months from Nov 2019 to February 2021
In these 3 months there won't be competing Soy bean Oil on planet earth unless old stocks
Palm oil on the other hand is ever green
So production and harvesting of FFB continues twice a month all year round. Total 26 months in one year
Today in Budget Speech FELDA is directly mentioned. Govt will waive Rm400 million loan interest of felda
Also incentive for both Rubber & Palm oil
These will directly benefit FGV the most
2020-11-06 22:47
i like your analysis on this counter..quite interesting as for palm oil counter i usually look at fgv & sop..what's your take on these 2 counter?
will thematic trading happen to palm oil counters or only certain counter will shine?
2020-11-07 01:54
Keown83
Thank you
First i must correct my statement
Palm oil harvest is 26 times a year (not 26 months)
And regarding Fgv and Sop yes both are good now
Sop is very popular with funds and investors. So its prices are stable. Fgv has gone through a very rough time. In fact i once branded FGV as "Fraud Governed Victim)
Since i like to buy bargains i prefer Fgv now due to its bombed out price from listing of almost Rm6.00
Like Sop.... Fgv top 30 shareholders are 100 per cent Local Funds and Foreign Funds owned. Amanah Saham Bumi also inside
It is no wonder then the Govt budget allocates Rm400 millions to help Felda relieves loan interest. Plus incentive for rubber and palm oil will also help
So Fgv being the palm oil stock specially mentioned by name is now the Top Buy
2020-11-07 08:56
Not only Fgv only all other palm oil stocks will go up due to Cpo price rise.
The performance depends on two things
1. Its exposure to palm oil upstream
Among them are Rsawit (100 per cent pure palm oil) jtiasa (more palm oil less lumber), in contrast Wtk has more lumber less palm oil except Wtk has better net cash.
2. Its geographical location
Jtiasa has all its palm oil in Sarawak while Tsh has operation in Indonesia
Since Malaysia offers tax free incentive while Indonesia impose tax on palm oil Jtiasa is better than Tsh anytime
2020-11-07 09:02
Rsawit ,Jtiasa , Tsh , TDM , FGV are all bomb out counters and pure upstream players. Tsh is one of the more efficient private owned producers {estate's landbank and mill's locality } is a plus point. their Mill's electrical power energy production tie up with TNB electric grid is a added upside advantage. just my own personal take & observation
2020-11-07 14:29
Tsh is ok
Only setback is its operations in a indonesia sujected to tax
Malaysia palm oil companies enjoy tax free incentive
That is what Malaysia palm oil stocks now more active than those from Spore
I got two indonesia palm oil stocks listed in Spore
Bumitama has moved slightly
Golden agri still not move yet
2020-11-07 17:06
Yesterday soybean oil in USA closed solidly above Usd35
So this coming week might witness fcpo cross the Rm3500 barrier
Big big surprise is
Even China Palm oil Ipo by Wilmar spin-off was very hot
And Wilmar Spore also up by more than 20 per cent
Now market still ignore palm oil upcoming bull run
2020-11-07 17:11
A rising tide lifts all boats
So all companies with exposure to palm oil will go up in tandem
Only by degree. Some more. Some less
Our mission is to find the best
2020-11-07 22:56
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Thanks Calvin. Good write-up. Clear and precise as to why plantation stocks will soar like the eagles :)
2020-11-05 21:56