THE INVESTMENT APPROACH OF CALVIN TAN

THE 7 PHASES OF A SUCCESSFUL PALM OIL COMPANY, Calvin Tan

calvintaneng
Publish date: Tue, 26 Sep 2023, 09:46 PM
calvintaneng
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Hi Guys,

I have An Investment Approach I which I would like to all.

Dear Fellow Investors of i3 Forum,

This evening we are happy to bring you 7 Reasons why Investing in Palm OIl Co shares will be profitable over a long horizon

Here you go


1) Phase One - Palm Oil Planting Involves Very High Capital Outlay

Yes, A new Palm oil entity must first buy lands. Thousands, tens of thousands or hundreds of thousands of acres of lands

And these are expensive. And getting even more expensive over time

That is why Most Palm oil Cos MUST BORROW From Banks

As such Palm Oil Cos will see high Capital Repayment at least for the 1st 4 to 5 years before there is a harvest


2) Phase Two: The Waiting Time

After buying lands Palm oil Cos will need to clear the land and do infrar like building roads and drainage

And then Seedlings must be purchased for planting

Now it will take 4 years of waiting without any real income


3) Stage Three. Needing More Cash: Rights Issue given to ask for Monies

Not only that Most Costs will be incurred as well as we see only CASH Going Out (With little or no cash Coming in)

Then with Cash Depleted Palm oil Cos might Give Out Rights Issue to ask for more money from shareholders


4) Stage Four

Finally, at Year Four FFB (Fresh Fruit Bunches) Start to appear

But still hardly enough to cover cost of Overheads, Labour, Fertilizer & to pay Bank Loans

The Balance Sheet looks poor indeed as Expenses continue to overtake Income

Some might even Give Another Rights Issue again

Many people who read AR (Annual Reports) of Palm oil Cos will be turned away


5) Stage Five: Highly Productive Stage from year 6 to year 20 : SEE STRONG CASH INFLOW

And Bank Loans Melting Away Fast

From Billions of Debt

To only Few Hundred Millions

Then to ZERO DEBT

And FINALLY!

FLOWING IN CASH!

YES!

PALM OIL IS A CASH CROP!

EVERY TWO WEEKS LORRIES MOVE INTO PALM OIL ESTATES TO COLLECT RIPENED FRUITS

And These Will Be Processed Quickly into CRUDE PALM OIL

At this stage it is called "CRUDE" but after sent to "REFINERIES" they are converted to Cooking Oil, Oil Fats, Soaps, Margerine, Toothpaste, Milk Substitutes like Creamer & thousands of other products

MORE DOWNSTREAM MEANS MORE VALUE ADD & HIGHER PROFITS


AT  STAGE FOUR & STAGE FIVE  SAVVY INVESTORS & SMART FUNDS MOVE IN TO TAKE HUGE POSITIONS

Examples: Dr. Neoh Soon Kean, Cold Eye aka Fong Siling, Dr. Tan Chong Koay (Pheim Fund) & EAST SPRING FUND

Teachers' Retirement Funds from USA, DBS Bank Singapore, Public Bank Malaysia


6) STAGE SIX: PALM OIL COS TURNING INTO DIVIDEND CASH COWS

Lots & lots of Dividends being Dished Out

Mr. Market Chased up the shares from Penny Stock to Blue Chip status

Eg. KL Kepong, Batu Kawan, United Plantation (But No Longer Cheap At This Stage)

We see Fong Siling took position in Innoprise Plant at Stage Five. Both Dr Neoh Soon Kean of Dynaquest & Fong Siling Took position in Jaya Tiasa at Stage Five

At Stage Six Prices Moved Up STRONGLY AS RETAIL PLAYERS & FUNDS MOVED IN (AT EUPHORIA PRICES ALREADY UP

Like Innoprise Plant Up from 50 sen to Rm1.99 (too late to chase now)

We now SEE JAYA TIASA AT STAGE FOUR GOING INTO STAGE FIVE

Still Got Time to Buy Jaya Tiasa Below 90 sen

By the Time Jaya Tiasa reaches Stage 6 it will be too late to get it cheap like now as Jaya Tiasa expected to cross Rm1.00 to Rm1.20 & then higher and higher if they give more and more dividends

For TSH it is now moving strongly from Stage Three to Stage Four and there Offers the "BEST PRICES & BARGAINS"


7. Stage Seven: When Time is Ripe: A Listed Palm Oil Co dripping with Value Will be Targets for Privatisation

Two Things Attract A "TAKEOVER"

A) HIGH FFB Production time like Ijm Plant Being Taken Over by KL Kepong

B) HIGH LAND ASSETS as in BPlant(Assets Appreciate over Time)

Ijm Plant was Rm1.86 & KLK Offerred Rm3.10 to take all

Bplant was only 57 sen in year 2021 & Now KLK again offers Rm1.55 to take over

THE CROWNING SUCCESS IS BEING OFFERED AT A HIGH PRICE AT ITS FINALITY!



With Kind Regards

Calvin Tan


Please buy or sell after doing your own due diligence or consult your Remisier/Fund Manager



Stop Press


And See THESE RIGHTS ISSUES & DIVIDEND BEING PAID OUT BY INNOPRISE PLANT



AS YOU CAN SEE ABOVE


IN YEAR 2010 INNO GAVE RIGHTS ISSUE TO ASK FOR MONIES

INNO WAS STARTED IN YEAR 2007 By DIRECTOR LIM FOOK HIN & TSH BOD OF TSH RESOURCES AT THE BEHEST OF SABAH GOVERNMENT


AGAIN IN YEAR 2016 (6 YEARS LATER) INNO AGAIN ISSUED NORE RIGHTS ISSUE

THOSE INITIAL YEARS SAW INNO SHARE PRICE FELL BELOW 50 SEN


By August 2020 Inno started with an increase of dividend to 4.5 sen (2 sen & 2.5 sen)

And Fong Siling bought an initial  portion about 2 million Inno Shares

As INNO Increased Its Dividends More & More Fong Siling Kept On adding till he has 5 Million INNO Shares Now


See

List of Top 30 Securities Account Holders

No. Name No. of shares held %

1. Innoprise Corporation Sdn. Bhd. 240,469,407 50.22

2. TSH Resources Berhad 105,060,592 21.94

3. UOB Kay Hian Nominees (Asing) Sdn. Bhd.

Exempt AN for UOB Kay Hian Pte Ltd (A/C Clients) 21,569,950 4.50

4. Alliance Group Nominees (Tempatan) Sdn. Bhd.

Pledged Securities Account for Mutual Corridor Sdn. Bhd. (7005036) 8,500,000 1.78

5. RHB Capital Nominees (Tempatan) Sdn. Bhd.

Pledged Securities Account for Fong Siling (CEB) 5,000,000 1.04


At Number 5 is Cold Eye with 5 Million Inno shares


Now see Jaya Tiasa


158 JAYA TIASA HOLDINGS BERHAD [Registration No. 196001000095 (3751-V)]

ANALYSIS OF SHAREHOLDINGS

As at 30 September 2022

Top 30 Securities Account Holders (Cont’d)

No. Name No. of Shares %

17 RHB Capital Nominees (Tempatan) Sdn Bhd

Pledged Securities Account For Fong Siling (CEB) 5,000,000 0.52

18 Citigroup Nominees (Asing) Sdn Bhd

CBNY For Emerging Market Core Equity Portfolio DFA Investment Dimensions

Group INC 4,765,438 0.49


At Top 17 is Cold Eye with 5 Million Jaya Tiasa Shares


Jaya Tiasa used to have over Rm1.4 Billions Borrowings

Now only a mere Rm93 Millions debt

Closely Following 

19 Ooi Chin Hock 4,190,115 0.43

20 HSBC Nominees (Asing) Sdn Bhd

JPMCB NA For Teachers’ Retirement System Of The City Of New York 3,759,200 0.39


ACORDING TO DIRECTOR LIM FOOK HIN (HE USED TO OWN INNO SHARES BUT SWITCHED ALL TO TSH)

PALM OIL COS AFTER SETTLING ALL DEBTS & TREES MATURE THEY WILL BE CASH COW FOR MANY MANY YEARS TO COME


THAT IS WHY FONG SILING & DR. NEOH AS WELL AS TEACHERS' RETIREMENT FUNDS OF USA LIKE PALM OIL SHARES



Kind Regards

Calvin


Please buy or sell after doing your own due diligence

 

More articles on THE INVESTMENT APPROACH OF CALVIN TAN
Discussions
Be the first to like this. Showing 20 of 20 comments

calvintaneng

JAYA TIASA Used to Have Rm1.4 Billions borrowings
Now debt pared down to only Rm93 Millions

Jtiasa will soon follow Inno to be a debt free high dividend paying palm oil stock hopefully

Close behind is Tsh Resources with Rm1.46 Billions debt
Now a mere Rm77 mil debt only

2023-09-26 22:14

stockraider

I think jtiasa can outperform agst nestle & dlady over the next 2 yrs loh!

2023-09-27 10:54

calvintaneng

Absolutely correct

Nestle has geographical constrain as its products are limited to Malaysian market and export not allowed

This is what Robert Kuok experienced when he said a big fish in a small pond

For dlady even worst as it is also not allowed to expand by export it is facing more competition all the time

Since Jtiasa is into palm oil it has a big world market out there

2023-09-27 13:04

calvintaneng

All the strong fundamentals are converging at Jtiasa to go Kaboom!

2023-09-27 22:32

darecom

Good day to you, Calvin,

"JAYA TIASA Used to Have Rm1.4 Billions borrowings Now debt pared down to only Rm93 Millions"

As of my record, Jtiasa highest borrowing in the past 10 years was in the year 2017 (1.07Bil), and in the latest Q4 quarterly report, the borrowing is at RM348 mil (short-term + long-term borrowings).

May I know where the RM93 mil debts are derived from? Or we are not referring to the same thing?

Thanks in advance!

2023-09-29 11:14

calvintaneng

Darecom

Happy to see your posting and asking intelligent questions

Will be happy in replying soonest😊

2023-09-29 11:46

calvintaneng

Ok darecom at the moment I not at a computer and using handphone to check and post answers to the best I can for now

Refer to Feb 2017 qtr balance sheet of Jtiasa

it has
current loans Rm475 mil
Payables Rm158 mil
non current loan Rm679 mil
Tax liabilities Rm132 mil
total = Rm1.44 Billions

2023-09-29 12:11

calvintaneng

for current qtr of Aug 2023

Rm56.767 mil current loan
Rm292 167 non current loan
= Rm348.934

less cash Rm232.384
other current assets Rm13.070 mil
investment securities Rm9.730
total RmRm255.184Rm93.75 mil

hope you can understand

loans less cash

=

total debt is

2023-09-29 12:22

calvintaneng

Net debt is Rm93.75 mil

2023-09-29 12:24

calvintaneng

On Feb 17 2017 Jtiasa with highest debt was Rm1.38

Now Jtiasa total debt only Rm93.75 mil and price only 88 sen is so cheap

2023-09-29 12:44

darecom

Hi Calvin,

Thanks so much for your swift response!! Got it. The RM93.75 mil that you posted is essentially the loans less cash and cash equivalent alike. Crystal clear.

Besides, I have a little concern about Jtiasa weighted average palm age (95% of the trees) which is about 14 ~ 15 years+-, I understand that this is the best time for the company to harvest more FFB while the CPO price is so much higher compared to the year of 2013, 2015, 2016, 2019 & 2020. But at the same time, replanting will be something to be considered in the near future (in next 5 - 6 yrs perhaps, when the CPO price is low) IF the company wanna keep the business rolling for the longest time, that's what United Plantation is doing. What would be the costs to gradually replant such a huge piece of land (cost/ acres)?, what would be the damage to the FCF hence the dividend to be paid to us in the future..

Thanks

2023-09-29 13:06

calvintaneng

next 5 or 6 years i expect Biofuel in Indonesia will soak up more Cpo and Malaysia also might implement a biofuel policy as well

by then if Crude oil remain above Usd70 - Usd80 a barrel more Cpo will be converted to biodisel or biofuel and as such Cpo prices will remain above Rm3500 a ton

All these are projections but humans will still need Palm oil no matter what as it is the most economical vege oil around

2023-09-29 13:55

darecom

Agree and understand these are all projections, no worries.

Talking about turning more CPO into Biofuel.. The Indonesian government has set an ambitious goal to raise the market share of electric vehicles in Indonesia to 25% of total vehicle sales in 2030. That's a lot of effort putting in place to reduce the import of fossil fuels into the country

2023-09-29 14:22

Patient Investor

@calvintaneng I did some comparison among JAYATIASA, TSH and UTDPLANT.

the FFB yield per matured planted areas(MT/HA) is much higher in TSH and UTDPLANT
JAYATIASA ~ 16 (prepandemic)
TSH ~ 23.5
UTDPLANT ~ 26.5

do you know the reason behind? was wondering if due to species or planting density? All of their trees are in prime age if not mistaken .

thus would it be more accurate to compare them based on FFB produced instead of land?

2023-10-03 16:51

calvintaneng

JTIASA trees are young

TSH trees got high quality yield by Research

Uplant has dedicated train track for harvesting FFB is Superior

2023-10-04 01:16

lsyiat

Do you survey on bumitama agri, the company is in what stage now?

2023-10-24 08:56

calvintaneng

Bumitama is at stage 4 to 5

2024-01-21 00:00

calvintaneng

Fong Siling aka Cold Eye started with 2 million Jtiasa shares

Then he topped up to 5 million Jtiasa shares

Now he has 10 million Jtiasa shares

2024-01-21 00:03

calvintaneng

This was posted in Bumitama (Spore) tread


kelvin_ik4u Plam oil is always like that, start plant require cash/fund/debts to build empire. Once it empire steady and cash generated machine, it will be an auto-pilot for next 18yrs. This counter will be the next shine palm oil for this year.. it's CAGR 21% compounding for next 3 yrs, now Bumitama just sit and collect money as all it palm tree is 6-7yrs now with FFB nucleus oil >24%, 107% growth vs Q1'FY13. Strongly believe this counter will start give dividents moving forward. Since CPO price is up ard ~RM2700/tan metric, I believe will share price will skyrocket this yr. Target $2.00 before end of this year 2014.
19/05/2014 6:16 PM

https://sgx.i3investor.com/servlets/stk/p8z.jsp

What applies to Singapore Bumitama also apply to Jtiasa, Tsh, Thplant, Hs Plant and all other Palm oil Companies

JAYA TIASA Now On Auto - Pilot

Streams of Earnings translate to Future Streams of Dividends

https://www.youtube.com/watch?v=aX_efvvsyWg

WITH SUCH STRONG EARNINGS JTIASA AND ALL OTHER PALM OIL COMPANIES WILL BE OVER FLOWING WITH MASSIVE CASH INFLOW

THE OUTFLOW?

CASH DIVIDENDS LIKE DAMS DISCHARGE WATER!!!

2024-02-08 07:42

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