Dear Friends of i3 Forum,

We are now in a Mini Bull Run in Palm Oil Companies. Will it morph into a Full Fledge Bull like the Glove Bull Run of year 2020?

For that we will wait to see

In any case take note

The Collapse of the Ringgit Against USD made Malaysian Furniture Super Competitive Competitive in year 2014 when Many Furniture Stocks jumped 200%, 300% and up to 500% up like Lihen, Pohuat and Latitude. Now no more as USA is in a retail down turn due to high interest cost. And Many Furniture Companies are in trouble. So this round furtinure export will not benefit from cheap ringgit

FOR NOW IT IS PALM OIL

Why Palm Oil?

THE ANSWER IS THIS:

PALM OIL ALREADY CHEAPER TO PRODUCE COMPARED TO SOYBEAN OIL AND OLIVE OIL

NOW WITH VERY CHEAP RINGGIT PALM OIL HAS TURNED SUPER COMPETITIVE

AND MORE SO AS OLIVE OIL IS SO VERY EXPENSIVE THEY GOT TO LOCK THEM UP

SEE

Spanish supermarkets lock up olive oil as shoplifting surges

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LIST OF 30 LARGEST SHAREHOLDERS

No. Shareholding %(3)

1. Hap Seng Consolidated Berhad...... 556,008,000......... 69.53%

2. Citigroup Nominees (Tempatan) Sdn Bhd

- Employees Provident Fund Board 13,867,800....... 1.73%

3. Amanahraya Trustees Berhad

- Public Smallcap Fund

Since Total paid up Capital of Hs Plant is about 800 Million paid up shares

At 70% Hs Plant got in hand there is only remaining free float of 30% x 800,000 shares

= 240 million shares not owned by Hs Plant

Current price of Hs Plant is Rm1.85

So if Hap Seng Consolidated wants it could take all private at only a mere Rm444 Milions Cash

Now see further

HS PLANT HAS ALREADY BEEN DEBT FREE SINCE LONG AGO

When HS PLANT SHARE PRICE PEAKED IN YEAR 2022 AT RM3.27 IT HAS A CASH HOARD OF RM390 MILLIONS

TODAY HS PLANT IS RM1.85 AND IT HAS A CASH HOARD OF

SEE Latest Qtr result from Bursa

Money market deposits Rm418,078,000

Cash and cash equivalents Rm63,747,000

Rm481.825 Millions (Cash up by Rm90 Millions Extra Surplus from year 2022!)

So easy. In principle HAP SENG could borrow and use Rm444 Millions to take the Balance of 30% to take Hs Plant private and then after privatisation take out the Rm481 Millions Cash and settle all bank loans plus Rm37.825 Millions left over cash

PLUS HAP SENG WILL ALSO OWN THE PALM OIL MILLS PLUS 99,500 ACRES OF OIL PALM LANDS IN LAHAT DATU FREE OF ENCUMBERANCES

Now Hs Plant Palm oil Lands are all 100% located in Lahat Datu the Palm Oil Belt in Sabah

Too see this we look up TSH RESOURCES WRITE UP

The Group processes crude palm oil & crushes palm kernel oil

TSH currently operates 6 mills with a combined processing capacity of approximately 1.8 million tonnes of Fresh Fruit Bunches (FFB) per annum.

The Group has 2 Sabah-based palm oil mills located along the Sabah Oil Palm Belt (Tawau – Lahad Datu – Sandakan highway). The rest of the palm oil mills are based in Indonesia, and located respectively in West Sumatera, Central and East Kalimantan.

TSH has also established a joint venture with Wilmar International Ltd. to support its upstream activities in Sabah, mainly the refining of crude palm oil (CPO) and palm kernel (PK) crushing.

From above we note that LAHAT DATU is 

 located along the Sabah Oil Palm Belt (Tawau – Lahad Datu – Sandakan highway)

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Now recently NPC Resources proposed to sell Palm oil lands to Tamaco in Sabah

See

PETALING JAYA: NPC Resources Bhd is disposing of 13 parcels of palm oil agriculture lands measuring 7,505 acres in the District of Labuk and Sugut, Sabah, to Tamaco Plantation Sdn Bhd for a total of RM165mil.

In a filing with Bursa Malaysia, NPC Resources said Tamaco Plantation had accepted the letters of offer to sell the lands from the former’s three subsidiaries, namely Berkat Setia Sdn Bhd, Bonus Indah Sdn Bhd and Kian Merculaba Sdn Bhd.

Star paper reported

NPC RESOURCES SELLING 7,505 ACRES LAND IN LABUK and SUGUT to TAMACO PLANTATION FOR RM165 Millions

To get per acre cost divides Rm165 Millions by 7,505 acres

= Rm21,985 or we round it up to Rm22,000 Per acre

Now if we value HS PLANT Lands at this price of Rm21,985 per acre 

it will be Rm21,985 multiply by 99,500 Acres

= Rm2,187,507,500

Or Rm2.187 Billions Total Worth

And how much per share value?

See

2187507500 divides by Rm37,847,000

X 4.73

= Rm2.73 Per Share

Now that is based on Value of Rm22,000 in Labuk & Sugut which are inferior location compared to Lahat Datu

Now if we also add Cash of Rm481 Millions?

How much is Rm481 Millions per cash share?

so 481,000,000 divides by 37,847,000

multiply by 4.73

= 60.11 sen

Add that to Plantation Value of Rm2.73

= Rm3.33 per share

And we only use Labuk & Sugut land prices plus not yet include its palm oil Mills

We think the total real intrinsic value should reach Rm4.00 and above for Hs Plant no matter how you look at this

So at Rm1.85 Hs Plant is still very undervalue

One More thing

LAHAT DATU is located near a Bay and will have long term commercial value in future

Just like Batu Kawan located Near Penang while Perlis is located in more Ulu Area

So LAHAT DATU IS LOCATED NEAR TAWAU while Lubuk & Sugut more in agriculture zone

Best Regards

Calvin Tan

Please buy or sell after doing your own due diligence or Consult your Fund Manager