THE INVESTMENT APPROACH OF CALVIN TAN

HS PLANT (5138) A PALM OIL LAGGARD WITH DEEP VALUE YOU SHOULD TAKE NOTE, Calvin Tan

calvintaneng
Publish date: Mon, 19 Feb 2024, 11:58 PM
calvintaneng
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Hi Guys,

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

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



Spanish supermarkets lock up olive oil as shoplifting surges



Olive and sunflower oil bottles are displayed for sale, protected by a padlock and a chain to prevent theft in a Tu Super Suma supermarket in Malaga, Spain, on Oct 23, 2023
PHOTO:  Reuters

SO PALM OIL SHOULD DO WELL AND SELL WELL NOW

THE MAJOR MARKETS OF PALM OIL IS CHINA, BANGLADESH, PAKISTAN, THE MIDDLE EAST &  INDIA AND THE EU (NOT USA)
TOTALLY OVER 5 BILLION CONSUMERS OF PALM OIL


AND ACCORDING TO WARREN BUFFET

"IF A BUSINESS DOES WELL ITS SHARE PRICE EVENTUALLY FOLLOWS"

THAT IS WHY PALM OIL SHARE PRICES NOW GO UP

In fact people everywhere been asking, "WHY FOOD PRICES UP EVERYWHERE? Chicken rice was Rm6.00 to Rm7.00 before MCO. After MCO Chicken rice gone up as high as Rm10.00. Why Palm oil Shares no up ah?
 
WHY COOKING OIL PRICES UP IN ALL SUPERMARKETS LIKE AEON, MYDIN, ECO SAVE, GIANT, TF MART, COLD STORAGE & LOTUS SUPER MARKET? BEFORE MCO a 5KG COOKING OIL RETAILS FOR RM19.90. AFTER MCO A 5KG COOKING OIL SELLS AT HIGHER PRICE OF RM29.90. Food and Cooking Oil all gone Up & Up.

BUT PALM OIL SHARES NO RISE?

SO NOW PALM OIL SHARE PRICES HAVE RISEN LIKE BPLANT, JAYA TIASA, THPLANT & OTHERS

NOW THERE ARE STILL LAGGARDS NOT RISEN YET WHICH WE CAN STILL BUY BEFORE THEY ALSO GO UP

ONE STOCK IS HS PLANT.

AND THESE ARE OUR REASONS WHY HS PLANT IS GOOD

BPLANT WAS RM1.10 to RM1.20 RANGE IN APRIL 2022. NOW LTAT TOOK BPLANT PRIVATE AT RM1.57

JTIASA WAS AROUND RM1.16 IN APRIL 2022. NOW RM1.34. SO JTIASA HAS TOUCHED A NEW HIGH

THPLANT WAS RM1.13 IN MARCH 2022 AND NOW 82,5 SEN. SO THERE IS STILL A DISCOUNT TO MARCH 2022 PEAK

NOW SEE THIS

TSH RESOURCES WAS RM1.89 AT PEAK PRICE IN APRIL 2022
NOW AT RM1.13 IT IS STILL 40% BELOW PEAK PRICE. 
PLUS CHAIRMAN KELVIN TAN AIK PEN BOUGHT TSH AS HIGH AS RM1.79 IN YEAR 2022 WHILE HIS BROTHER TAN AIK YONG BOUGHT 16 MILLION TSH AT THE AVERAGE COST OF RM1.643
SO THERE IS MORE UPSIDE TO REACH YEAR 2022 PEAK

NOW LOOK AT HS PLANT

ITS APRIL 2022 PEAK WAS RM3.27 AND NOW ONLY RM1.85

SO HS PLANT AT 44% DISCOUNT TO PEAK OF RM3.27 HAS FALLEN EVEN LOWER THAN TSH!

HENCE AS VALUE INVESTORS WE NOW WANT TO HIGHLIGHT HS PLANT AGAIN

AND THESE ARE THE SALIENT FACTORS ABOUT HS PLANT

HS PLANT IS A DEBT FREE, CASH RICH PALM OIL CO WITH MAJORITY SHARES IN THE HAND OF HAP SENG CONSOLIDATED

See AR from Bursa


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)


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


Lahad Datu District - Wikipedia
Lahad Datu District - Wikipedia








Best Regards


Calvin Tan


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

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calvintaneng

One more thing to note

Hs Plant has a dividend policy of giving out 60% profit as dividend

Time to buy before dividend news out soon this month

1 month ago

calvintaneng

Hap Seng Plantation (5138) A Solid Stable Dividend Palm Oil Stock you can sleep well after investing, Calvin Tan

https://klse.i3investor.com/web/blog/detail/www.eaglevisioninvest.com/2024-02-07-story-h-189229142-Hap_Seng_Plantation_5138_A_Solid_Stable_Dividend_Palm_Oil_Stock_you_can

1 month ago

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