THE INVESTMENT APPROACH OF CALVIN TAN

THPLANT (5112) at 50 sen Versus Kelington (0151) at Rm1.92; Compare & contrast their Intrinsic value & potential, Calvin Tan

calvintaneng
Publish date: Fri, 01 Dec 2023, 10:00 AM
calvintaneng
0 1,781
Hi Guys,

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

Dear Friends

THPLANT is bombed out and unwanted/unloved at 50.5 sen while KGB is now a hot stock recommended by Analysts

We shall take a look at both


1) THPLANT


See current qtr result


SUMMARY OF KEY FINANCIAL INFORMATION

30 Sep 2023


INDIVIDUAL PERIOD
CUMULATIVE PERIOD
CURRENT YEAR QUARTER
PRECEDING YEAR

CORRESPONDING

QUARTER

CURRENT YEAR TO DATE
PRECEDING YEAR

CORRESPONDING

PERIOD

30 Sep 2023
30 Sep 2022
30 Sep 2023
30 Sep 2022
$$'000
$$'000
$$'000
$$'000
1
Revenue
216,639
213,392
535,524
661,947
2
Profit/(loss) before tax
28,548
23,881
60,947
81,394
3
Profit/(loss) for the period
21,055
16,144
39,821
52,684
4
Profit/(loss) attributable to ordinary equity holders of the parent
17,553
14,367
34,339
45,721
5
Basic earnings/(loss) per share (Subunit)
1.50
1.13
2.37
4.68
6
Proposed/Declared dividend per share (Subunit)
0.00
0.00
0.00
0.00


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 ($$)
0.7900
0.7900

This qtr earned 1.5 sen

Annualised 1.5 x 4 = 6 sen

At 50.5 sen

its P/E is 8.41

If we assign P/E 10 it will be 60 sen

P/E 15 will be 90 sen

P/E 20 will be Rm1.20

In time past they assign P/E 25 to plantation

So the goal post has changed and might be changed again in future as market is not static

Look further

At 50.5 sen with NAV of 79 sen it is selling at a nice discount of 36%

This is better than 30% discount to NTA advocated by Ben Graham as a margin of safety

Now look at its balance sheet

(Refer Bursa website)

Current loan  Rm798,706,000

Non current loan Rm36,000

Total debt = Rm834.706 Millions

And cash Rm95,487,000

Other Invetments Rm15,801,000 & Rm1,825,000

Total cash/cash equivalents: Rm113,113,000

Debt less cash

=  Rm721,593,000


Now how to clear this debt?

Answers:

Two ways

1) By regular earnings from palm oil operations

This qtr profit is Rm17,553,000 profit after tax (PAX)

One year X 4 = Rm70.212 Millions a year

Now divides 

 Rm721,593,000 by Rm70,212,000

= 10.27 years

So at the current rate of income it will take 10.27 years to see THPLANT debt free

But look mare carefully again

Assets classified as held

for sale (Under Note 13)  Rm782,389,000

These are 7 Palm oil Estates in Sarawak held for sale at reserve price of 

Rm782.389 Millions

If these are sold then both its current and non current loans will be settled INSTANTLY (no need wait for 10 years)

it will be Rm782.389 Millions less Rm721,593,000

= Rm60.796 Millions

Of course we know Those Designed Rm782.389 Millions (Lands) Are Worth Far More

And the actual sale price will reveal its True Value

Now latest Qtr FFB is over 91,000 Tonnes

So we expect with High Cpo prices Rm3500 to Rm4200 Thplant should see accelerated real earnings

So Thplant has Huge Margin of Safety and over time we should see its Value go up by Assets Disposal as in Bplant (Bplant has 220,000 acre while  Thplant beats it at 240,000 acres)

It will also jump like a tiger like Jtiasa after its debts are cleared

Its 91,000 FFB now trailed Jtiasa at 131,000 tonnes

Given time Thplant should see more maturing Palm oil from its Vast 240,000 Acres (Jtiasa 206,000 acres)

This Thplant has Assets as low as Rm3K per acre in Sarawak to Rm5K per acre in Trengganu, Pahang, Johor, Sarawak & Sabah (FULL OF ASSETS VALUE)

240,000 ACRES is 1.35 X Spore Landsize of 177,000 Acres

At 50.5 sen it is totally bombed out and unwanted. Hence it attracts our attention


2) Kelington 

SUMMARY OF KEY FINANCIAL INFORMATION

30 Sep 2023


INDIVIDUAL PERIOD
CUMULATIVE PERIOD
CURRENT YEAR QUARTER
PRECEDING YEAR

CORRESPONDING

QUARTER

CURRENT YEAR TO DATE
PRECEDING YEAR

CORRESPONDING

PERIOD

30 Sep 2023
30 Sep 2022
30 Sep 2023
30 Sep 2022
$$'000
$$'000
$$'000
$$'000
1
Revenue
401,824
366,394
1,135,662
852,119
2
Profit/(loss) before tax
39,142
18,849
86,107
47,466
3
Profit/(loss) for the period
32,009
16,335
68,929
38,781
4
Profit/(loss) attributable to ordinary equity holders of the parent
31,668
15,706
66,920
37,567
5
Basic earnings/(loss) per share (Subunit)
4.91
2.44
10.39
5.84
6
Proposed/Declared dividend per share (Subunit)
0.00
0.00
1.50
1.00


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 ($$)
0.4746
0.3768


This Qtr earning 4.91 sen

Annualised 4.91 x 4

= 19.64 sen

At Rm1.88 

Its P/E is 9.57

Its P/E looks better than Thplant

But look at its NAV

it is 47.46

At Rm1.88 it is selling at Rm1.88 divides by 47.46 or 3.96 Times Book Value

Way too expensive unless its Earnings justify

Now look at its balance sheet (Refer Bursa)

Long term loans Rm56,160,000

Short term loans Rm160,071,000

Total debt Rm216,231,000


See Cash Rm190,062,000

Fixed deposit with bank Rm30,793,000

Total cash Rm220,855,000

Cash less debt = Rm4.624,000

About Rm4.63 Millions cash positive


Now look deeper

This qtr supposed to have earned 4.91 sen

Rm31.668 Millions (PAX) profit after tax

Where is the Money

To see that we look back to the CASH Acc of previous Qtr below


SUMMARY OF KEY FINANCIAL INFORMATION

30 Jun 2023


INDIVIDUAL PERIOD
CUMULATIVE PERIOD
CURRENT YEAR QUARTER
PRECEDING YEAR

CORRESPONDING

QUARTER

CURRENT YEAR TO DATE
PRECEDING YEAR

CORRESPONDING

PERIOD

30 Jun 2023
30 Jun 2022
30 Jun 2023
30 Jun 2022
$$'000
$$'000
$$'000
$$'000
1
Revenue
424,913
312,397
733,838
485,725
2
Profit/(loss) before tax
25,948
17,504
46,965
28,617
3
Profit/(loss) for the period
20,304
13,932
36,920
22,446
4
Profit/(loss) attributable to ordinary equity holders of the parent
19,064
13,559
35,252
21,861
5
Basic earnings/(loss) per share (Subunit)
2.96
2.11
5.48
3.40
6
Proposed/Declared dividend per share (Subunit)
1.50
1.00
1.50
1.00


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 ($$)
0.4249
0.3768


Inside the Balance sheet (last qtr)


Short term borrowings Rm140,828,000

Long term borrowngs Rm39,615,000

Total debt Rm180,443,000

See Cash

Cash and bank balances Rm149,342,000

Fixed deposit Rm30,380

Total cash/cash equivalent = Rm179,700,000

A net debt of Rm743,000

So here we see the actual cash earned QtoQ is only


Total debt less cash

=  RmRm4.63 & Rm743,000

= Rm5.37 Millions

But reported in Latest Qtr profit

Rm31.668 Millions?

Where is the Cash?

For that we look at Receivables Acc

Trade receivables Rm380,369,000 (Current qtr)

Trade receivables Rm321,366,000 (Previous Qtr)

So We See Profit has increased by Rm59 Millions

But they are NOT CASH BUT RECEIVABLE (OR IOU)

See definition of Receivables

What Are Accounts Receivable (AR)?

Accounts receivable (AR) are the balance of money due to a firm for goods or services delivered or used but not yet paid for by customers. Accounts receivable are listed on the balance sheet as a current asset. Any amount of money owed by customers for purchases made on credit is AR.

IN OTHER WORDS THEY ARE IOU (I OWE YOU) & NOT CASH

Now look at all past records of KGB

Again Please Refer to Bursa Webpage


KELINGTON GROUP BERHAD ("KGB")

[Company No. 199901026486 (501386-P)]

Statement of Financial Position

As at 30 June 2022

Trade receivables 321,366,000

Other receivables 85,460,000

Total (IOU) = Rm406.826 Millions


And all throughout June, Sept, Dec 2022, March 2023, June 2023 & Sept 2023

KELINGTON still sitting on RECEIVABLES (IOU)


 

KELINGTON GROUP BERHAD ("KGB")

[Company No. 199901026486 (501386-P)]

Statement of Financial Position

Trade receivables Rm380,369,000 

Other receivables Rm81,408,000

Total IOU = Rm461.777 Millions (IOU)

After 15 months we SEE IOU Gone up

And Cash Account only a small Rm5 Millions Surplus


See Further

Contract liabilities Rm255,820,000

Trade payables Rm188,949,000

Other payables Rm62,426,000

Due for payment = Rm507.195 Millions

(More than 1/2 Billion Ringgit due for payment?

Is there any assets for sale just in cash cash needed?

We do not see any Assets (No Property is listed in KGB AR)

So?

Only way is to Collect Receivable

Or get bank loan

Or Give Out Private Placement at Discount

All else failed then Give Rights Issue to ask for monies

All these are yet future

In any case we will know in time to come

IF KGB can get its IOU in on time then should be OK

If not then just be careful


Best Regards

Calvin Tan


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



Below are extracts from Past Quarterly Reports of KGB


KELINGTON GROUP BERHAD ("KGB")

[Company No. 199901026486 (501386-P)]

Statement of Profit or Loss and Other Comprehensive Income

For The 2nd Quarter Ended 30 June 2022

Trade receivables Rm325,044,000

Other receivables Rm37,469,000


Total Receivables or IOU = Rm382.513 Millions


 The 3rd Quarter Ended 30 September 2022

Trade receivables Rm343,453,000

Other receivables Rm68,075,000

Total IOU = Rm411.528 Millions


 31 December 2022

Trade receivables Rm384,641,000

Other receivable Rm80,805,000

Total IOU: Rm465.446 Millions


 31 March 2023


Trade receivables Rm334,890,000

Other receivables Rm102,703,000

Total IOU : Rm437.593 Millions


30 June 2023

Trade receivables Rm321,366,000

Other receivables Rm85,460,000

Total IOU: Rm406.826 Millions


d Quarter Ended 30 September 2023


Trade receivables Rm380,369,000

Other receivables Rm81,049,000

Total IOU : Rm461.418 Millions


Above shows persistent delay of Full Payments for Work Done by many quarters

How much of these sums will turn into bad debt?


Discussions
Be the first to like this. Showing 3 of 3 comments

calvintaneng

Thpant remain firm at 50 sen

Kgb was pumped up to Rm2.00 then dumped to Rm1.85

2 months ago

speakup

KGB macam nak limit down ni

2 months ago

calvintaneng

THPLANT : A MISPRICED & MISPLACED SECOND LINER AMONG PENNY PALM OIL STOCKS, AND AS SUCH AT 55.5 SEN IS A REAL GEM OF VALUE,Calvin Tan

https://klse.i3investor.com/web/blog/detail/www.eaglevisioninvest.com/2024-02-07-story-h-189258843-THPLANT_A_MISPRICED_MISPLACED_SECOND_LINER_AMONG_PENNY_PALM_OIL_STOCKS_

3 weeks ago

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