Dear Friends of i3 Forum,

After having switched to Palm Oil Investing in year 2020 till now we have some insights into the Palm Oil Industry

IT HAS TWO INCOMES: THE ACTIVE INCOME & THE PASSIVE INCOME.

And both are good for all Palm oil Entities: Some more on Active Income (And they are Visible). While others are more  into Passive Income

Let us explain:

EVERY PALM OIL COMPANY IN UPSTREAM Must first Buy Lands. These are its Capital Outlay. And These on its own are "PASSIVE INVESTMENTS" 

Why is it so?

BECAUSE LANDS ARE INDESTRUCTIBALE & WILL LAST AS LONG AS PALM OIL PLANTING LASTS

Now Planting Oil Palms on the land require Work. Lots of work. The Fruits of labour come from ACTIVE ENGAGEMENT all through the years

And here are a good example of Palm Oil Businesses that DEPEND ON ACTIVE INCOME

1) INNOPRISE PLANT

This company does not own its Lands as they belong to the Sabah Govt. TSH Resources was told to help

And TSH did an excellent job. The income of Inno has been spectacular. And resulted in very good dividends

In fact INNO is the best managed Govt GLC in Malaysia

All by the Excellent Management of TSH's BOARD OF DIRECTORS managing it from day one until more competent Leaders joined

See INNO has profit

INNO earned Rm16.632 Millions from a Revenue of Rm63.275 Millions

To get percentage in profit

Divides profit by Revenue

So Rm16.632 Millions divide by Rm63.275 Millions

= 26.2%

EXCELLENT!

Warren Buffet's Berkshire also got 25% performance

So INNO qualifies as Warren's Stock pick as he loves growth

In Malaysia Fong Siling is in Top 30 of INNO

On the other hand we have Companies that do not show much profit

But it has HIGH PASSIVE INCOME

BPLANT

See

Profit Rm15.216 millions while Revenue is Rm202.546 Millions

Or 7.4% profit yield

That is so little compared to INNO's 26.2%

But LTAT took Bplant private.

Why?

BECAUSE BPLANT although its earnings are mediocre

ITS ASSETS ARE "GOLD MINES"

By selling 1,200 Acres Land to Kulim Industrial Park for Rm330,000 an acre LTAT made A Whopping 1,000% PROFIT

HOW?

BECAUSE BPLANT'S KULIM LANDS GOT A BOOK VALUE OF ONLY RM30,000 PER ACRE

SO BPLANT MADE MORE FROM PASSIVE INCOME THAN ACTIVE INCOME

THEN THERE ARE THOSE WITH BOTH GOOD ACTIVE INCOME AND WHOSE LANDS SUDDENLY JUMPED IN VALUE

SO THEY REAP A PASSIVE INCOME BY DOING NOTHING

ONE GOOD EXAMPLE IS LANDS OWNED BY TSH RESOURCES

IN TANAH KUNING, BULUGAN, NORTH KALIMANTAN

TSH SOLD ITS LANDS FOR RM731.09 MILLIONS FOR ABOUT 33,000 ACRES

THEY WERE SOLD IN 3 PORTIONS

1ST & 2ND PORTIONS WERE COMPLETED AND CASH RECEIVED

FOR THE REMAINING ABOUT  13,000 ACRES TSH IS AWAITING RM221 MILLIONS CASH TO BE RECEIVED BY 4TH JULY 2024

NOW THE NEW BOOK VALUE 2023 FOR THESE REMAING 13,000 ACRES HAVE A NEW BOOK VALUE OF RM16,500 PER ACRE (WAS ONLY RM6,500 PER ACRE IN YEAR 2022 ANNUAL REPORT)

SO THERE IS AN INCREASE OF VALUE BY RM10,000 PER ACRE

SO  IT WILL BE AN INCREASE BY RM130 MILLIONS

NOW IN TANJONG SELOR, 90 KM FROM BULUGAN ASKING PRICE PER ACRE IS RM180,000

BY VIRTUE OF IT BEING PRIME INDUSTRIAL PARK LAND THESE REMAINING LANDS OF TSH WILL ALSO GO UP

THIS IS PASSIVE INCOME SHOULD SALE BE ABORTED

ONE DAY NEW BOOK VALUE COULD BE RM200K TO RM300K (NOW RM16,500 ACRE)

SO TSH HAS BOTH ACTIVE AND PASSIVE INCOME

WE EXPECT TSH TO OUTPERFORM BOTH INNO & BPLANT ONE DAY

WE SUGGEST BUY AND HOLD

WARM REGARDS

Calvin Tan

PLEASE BUY/SELL AFTER DOING YOUR OWN DUE DILIGENCE OR CONSULT YOUR REMISIER/FUND MANAGER