Dear Friends of i3 Forum

Last year in November 2021 KLK took IJM PLANT Private at Rm3.10

Today we will look at TSH & see its Performance in View of IJM Plant's Last Results

Here is IJM PLANT results

From above we See

Revenue Rm299.78 Millions

Profit 11.47 sen

NAV Rm1.74

KLK Took IJM PLANT Private at Rm3.10 which is 78% above is NAV of Rm1.74

Now if we take profit of 11.47 sen to calculate its adjusted P/E at takeover price of Rm3.10

Then 11.47 x 4

= 45.88

To get P/E divides Rm3.10 by 45.88

= 6.75 P/E

If all things remain constant KLK expect to double its money in Ujm Plant in only 6.75 years

And what is the yield

Divides 45.88 sen by Rm3.10

= 14.8%

That is 5.38 Times Bank FD at 2.75%

OK Now go deeper and look into Ijm Plant Balance Sheet

Refer to Bursa Website for Results of November 2021

Deposits, cash and bank balances:  Rm208.9 Millions

IJM PLANT Has Rm208.9 Millions in Cash

Non-Current Liabilities (Long term loan)

:Borrowings: Rm409.22 Millions

Current liabilities (Short term loan)

Borrowings: : Rm204.600 Millions

Total Borrowings is Rm613.82 Millions

Now Rm613.82 Millions loan less Rm208.9 Millions Cash

= Rm404.92 Millions (Debt)

So when KLK Took over Ijm Plant on November 2021 Ijmplant has a debt of Rm404.92 Millions

Look look carefully again below

Just 3 months Ijm Plant made Rm101.040 Millions in profit

One year Rm101.040 Million X 4

= Rm404.160 Millions

If all are status quo then IJM Plant one year profit of Rm404.160 Millions will settle all loans & Ijm Plant will become debt free

And future profits can be given out as dividends

Ok look at this below by IjmPlant (circa November 2021)

B3. Prospects for the Current Financial Year The Group is optimistic of a favourable financial performance for the current financial year based on market expectation that the palm product prices would remain elevated. However, this is barring any volatility of the foreign exchange rates, particularly that of the Rupiah against the US Dollar and Japanese Yen, and any adverse weather impact disrupting crop production.

0Note:  Above was Nov 2021 when Cpo was around Rm4,000  a ton (The spike of Cpo prices to the high of Rm7,000 caused by Ukraine War and Indonesia banning Palm oil export still months away

The Cpo prices around Rm4000 in which KLK tookover Ijmplant is similar now 

So we can compare apple to apple. That is; palm oil to palm oil co

Since TSH is identical to Ijm Plant

Lands in Sabah, East Kalimantan & Sumatra

Both got 6 palm oil mills

Both saw Prices crossed Rm4.00 during Palm oil bull run years of 2008 to 2012

We now look at TSH

Revenue is Rm262 Millions

Profit include asset disposal 18.72 sen

NAV is Rm1.50

Compare again

Ijmplant Revenue Rm299.7 mil to TSH at Rm262 Millions (Only more by 12%

NAV Rm1.74 Versus Rm1.50 only 14% more

THEN WHY SHOULD TSH CURRENT PRICE BE RM1,15 WHEN IJM PLANT WAS OFFERED RM3.10?

WHICH IS ONLY 37% OF IJM PLANT?

Ok we know after TSH reached Rm4.00 together with IJM Plant it gave a one free bonus for two

So readjusted for Bonus TSH should be Rm2.66 value

That is 2/3 of IJmplant peak at Rm4.00

Now if we take 2/3 value of Rm3.10 when KLK took over ijmplant

Then TSH should be worth Rm2.06 (2/3 of Rm3.10)

At Rm1.15 there is still a discount of 45%

Now go see TSH Account in Balance sheet

Refer Bursa Webpage

Cash and bank balances: Rm 355.020 Millions

Short term funds:  Rm6.206 Millions

Total Cash : Rm361.2 Millions Cash

Look at debt

Non-current liabilities

Loans and Borrowings:  Rm 292.988 Millions

Current liabilities

Loans and Borrowings Rm214.704 Millions

Total borrings Rm507.7 Millions

Loan Rm507.7 Millions less Rm361.2 Cash

= Rm146.5 Millions (Debt balance)

Now TSH got others which Ijm Plant does not have

See Balance sheet 

Investment in an associate  Rm78.473 Millions

Investments in joint ventures Rm112.652 Millions

Investment securities  Rm50,000 (correction : earlier mention Rm55 Mil actually receivables)

We will Not include receivables

If we add up the Total Investments are Rm191.175 Millions

Now deduct balance debt Rm146.5 Millions

= Rm44.6 Millions Surplus

From here we SEE Tsh already in Net Surplus 

Plus TSH awaits Rm238 Millions Cash from Land disposal whuch will then increase Surplus to RmRm282.6 Millions

From above our deduction and conclusion that TSH is Undervalue

The 3 yardsticks of

High Revenue Cpo over Rm4000

Low P/E 3 to 4

Plus 8 sen dividend 

Makes this share undemanding, low P/E with Margin of safety and dividend

With kind regards

Calvin

This is not a buy or sell call. Please consult your remisier or fund manager before buying or selling