If I were the big players, I might create more volitality to squeezed more short term traders. How can let them enjoy easy money so much. Hahaha

Back to the price 70 cents before ex dividend. I thought the big players would have dumped until 64 cents this morning for us to pick up at market cap MYR 9k/ planted hectare.

Just browsed the lands ownership of Jtiasa, SOP, SwkPlnt and TAAN. More than 90% of their palm oil land is under leasehold.

Now, Jtiasa is traded at market cap MYR 9.6k/ planted hectare. Both SOP & SwkPlnt are fetched at MYR 27k/ planted hectare ( excluding old trees ) whilst TAAN is hovering around MY 30k/ planted hectare.

Replanting costs are between RM 20k to 30k now.
https://www.thevibes.com/articles/business/87605/one-third-of-sabahs-oil-palm-trees-old-prompting-call-for-mass-replanting

Jtiasa left the debt-laden niche plantation club (FGV, NPC, Rsawit, TDM, ThPlnt & Subur). The company is marching back to the healthy balance sheet Sarawak plantation club ( SOP, SwkPlnt & TAAn )

Blueblues. What I meant is let us see whether Jtiasa would turn into a net cash company after 9 months.

Jtiasa will turn into a net cash company within 9 months. The Company would save at least MYR 20 million/ year interest payment. Besides profit itself, Non cash flow item Depreciation provides cash inflow around MYR 130 million/year. Low capex is another plus point. See how it goes 9 months later.

Jtiasa quarterly FFB production yield (annualised) per hectare was maintained slight above 16 tonnes at least from beginning 2018 until 2nd quarter 2020. The yield has slid to 10.5 tonnes in 2 years time until 1st quarter 2022. Most probably due to lack of money to buy fertilizer and shortage of labour while the CPO prices hitting low level during covid period. Now, the yield has been going up gradually to 12.5 tonnes while the company made a good profits for year 2022. Expect the FFB yield will be returned to 16 tonnes level within 24 months.

KPJ still got legs to move up further in comparison with IHH &TMCLife.

Testing time. Getting rid of short term traders.

Jtiasa will go out of wood in high gearing plantation group (NPC, Rsawit, TDM, THplant & GLBhd) traded at market cap MYR 10k/planted hectare. Upgrading to low gearing group is imminent to reflect great improvement in its financial position.

Huge reduction in borrowing in last 12 months. Rerating on the way.

EPF plays yoyo game and preventing share price from going wild. .

JTIASA is the cheapest market cap among the plantation companies. Market cap MYR 10k per planted hectare remains undemanding. Most of the plantation companies are traded more than MYR 20k

ESG is being misused by the certain group of people. When a sector is making good money then then market manipulators dish out ESG problems. Soon or later, every sector will be facing ESG issues.

It is quite straight forward to work out the profit of INNO based on the disclosure of TSH since INNO is the only associate ( stakes: 21.79% ) to TSH. It won't run way much.

1.883m/0.2194 = 8.6m

TSH stakes:
42% - RT Plantation ( classified under subsidiary )
50% - TSH - Wilmar ( JV )

SwkPlnt's FFB production has been increasing double digit for the past 2 years after acquiring by TAAN through focusing into enhancement and clearing encumbered areas left by the previous management.

FFB production volume:
Year 2020 - 341,065 MT ( + 22% )
Year 2019 - 280,649 MT (+ 14% )
Year 2018 - 245,852 MT (+ 5% )
Year 2017 - 234,109 MT

On top of higher CPO prices, FFB production volume for 2nd Qtr 21 will be higher than 1st Qtr 21.

QR is not really good after excluding gain in biological assets due to lowest FFB volume in 1st Qtr 2021 but production has started showing an increasing trend in Apr 2021.

60% of the palm oil plantation mature areas is contributed from Indonesia segment . The companies won't be able to profit much during the CPO price rally for the operation in Indonesia due to heavy tax and export duty.

Ijmplnt planation area in AR 2020:

Mature areas :
21,576 hac (Malaysia )
32,793 hac (Indonesia)

Immature areas:
3,322 hac (Malaysia )
3,275 hac (Indonesia)

Extracted from PublicInvest :

Not all players will fully benefit from the CPO price gains. Despite stronger CPO prices, not all players will enjoy the full benefit of CPO price rally as upstream plantation players in Indonesia are subject to hefty CPO export duty (USD144/mt) and CPO excise levy (USD255/mt), there would be huge income losses for them as they are only able to recognize a net CPO price of RM3,000/mt based on the current spot level of RM4,700/mt). This is significantly lower compared to Malaysia’s RM4,324/mt (after netting of 8% CPO export tax). Only players with refinery plants would be able to capture the full market price of CPO given the hedging nature.

Extracted from PublicInvest :

Not all players will fully benefit from the CPO price gains. Despite stronger CPO prices, not all players will enjoy the full benefit of CPO price rally as upstream plantation players in Indonesia are subject to hefty CPO export duty (USD144/mt) and CPO excise levy (USD255/mt), there would be huge income losses for them as they are only able to recognize a net CPO price of RM3,000/mt based on the current spot level of RM4,700/mt). This is significantly lower compared to Malaysia’s RM4,324/mt (after netting of 8% CPO export tax). Only players with refinery plants would be able to capture the full market price of CPO given the hedging nature.

TSH operation is much dependent on Indonesia segment . The companies won't be able to profit much during the CPO price rally for the operation in Indonesia due to heavy tax and export duty.

TSH planation area in AR 2020:

Mature areas :
4,522 ha (Sabah)
24,380 ha (Indonesia)

Immature areas:
1,653 ha (sabah)
901 hac (Indonesia)

TSH is indirectly disclose the profit of its associate, Inno Plantation. With the sharing of the profit from the associate 1.883m, Inno Profit can be worked backwards... roughly about 8.5m in 1st Qtr 21. Hardly see any company announce QR before announcement make by their subsidiary or associate.

TSH is indirectly disclose the profit of its associate, Inno Plantation. With the sharing of the profit from the associate 1.883m, Inno Profit can be worked backwards... roughly about 8.5m in 1st Qtr 21. Hardly see any company announce QR before announcement make by their subsidiary or associate.

TAAn and Swkplnt will be benefited more from the commodity ride since the companies don't have the policy to hedge their sales or the palm oil is sold at spot prices. Furthermore, they don't have any plantation landbank in Indonesia.

https://klse.i3investor.com/blogs/PublicInvest/2021-05-19-story-h1565126530-Plantations_A_Super_Cycle_Coming_to_the_End_Soon.jsp

https://klse.i3investor.com/blogs/PublicInvest/2021-05-19-story-h1565126530-Plantations_A_Super_Cycle_Coming_to_the_End_Soon.jsp

TAAn and Swkplnt will be benefited more from the commodity ride since the companies don't have the policy to hedge their sales or the palm oil is sold at spot prices. Furthermore, they don't have any plantation landbank in Indonesia.

By looking at the CPO production for the past 6 years, it is obviously the decreasing trend was formed in 2020. The downtrend remains for first quarter 2021 with a reduction of 2% on the back of production quantity 14.55 million ton.

CPO production (Indonesia & Malaysia)

2020 - 70.8 million ton (-1.3%)
2019 - 71.7 million ton (+7.1%)
2018 - 66.9 million ton (+7.0%)
2017 - 62.5 million ton (+13.1%)
2016 - 55.3 million ton (+7.6%)
2015 - 51.4 million ton (+4.6%

By looking at the CPO production for the past 6 years, it is obviously the decreasing trend was formed in 2020. The downtrend remains for first quarter 2021 with a reduction of 2% on the back of production quantity 14.55 million ton.

CPO production (Indonesia & Malaysia)

2020 - 70.8 million ton (-1.3%)
2019 - 71.7 million ton (+7.1%)
2018 - 66.9 million ton (+7.0%)
2017 - 62.5 million ton (+13.1%)
2016 - 55.3 million ton (+7.6%)
2015 - 51.4 million ton (+4.6%

Calvin. I thought you want to do CSR. True also. It’s not good to you for revealing too many ‘untrusted’ counters. At least, The Edge has identified more than 30 counters in their article ‘hidden hands behind penny surge’

Calvin should come out a list of pump and dump companies without supporting of fundamental to serve as a warning for newbies.

Must give a credit to Calvin for revealing pump and dump operandi.

WTK's main business is timber harvesting and processing. Its plantation performance can't even match with small player like PLS plantation which has been making profits. Not to say that PLS Plantation mature areas is about 10% lower than WTK.

No local mainstream medias has reported spike in prices of log, plywood and particle boards. Lagging news?

There are many many high NTA companies with small segment in plantation ie Orient, Kseng, KSL ..

WTK should be able to make reasonable profit few years later.

WTK's segmental performance for the past 4 quarters.
Palm Oil division LOSSES (excluding revaluation of Biological Assets)
31 Dec 20 - 11.1m
30 Sep 20 - 45.6m (included impairment PPE 22.2m)
30 Jun 20 - 3.2m
31 Mar 20 - 3.8m

Timber division LOSSES
31 Dec 20 - 7.9m
30 Sep 20 - 112.2m (included impairment PPE 59.8m)
30 Jun 20 - 13.9m
31 Mar 20 - 17.8m

By looking at the CPO production for the past 6 years, it is obviously the decreasing trend was formed in 2020. The downtrend remains for first quarter 2021 with a reduction of 2% on the back of production quantity 14.55 million ton.

CPO production (Indonesia & Malaysia)

2020 - 70.8 million ton (-1.3%)
2019 - 71.7 million ton (+7.1%)
2018 - 66.9 million ton (+7.0%)
2017 - 62.5 million ton (+13.1%)
2016 - 55.3 million ton (+7.6%)
2015 - 51.4 million ton (+4.6%)

WTK's segmental performance for the past 12 months.

Palm Oil division LOSSES (excluding revaluation of Biological Assets)
31 Dec 20 - 11.1m
30 Sep 20 - 45.6m (included impairment PPE 22.2m)
30 Jun 20 - 3.2m
31 Mar 20 - 3.8m

Timber division LOSSES
31 Dec 20 - 7.9m
30 Sep 20 - 112.2m (included impairment PPE 59.8m)
30 Jun 20 - 13.9m
31 Mar 20 - 17.8m

TAAn's segmental profitability for the past 12 months.

Palm Oil division PBT (excluding revaluation of Biological Assets)
31 Dec 20 - 56.7m
30 Sep 20 - 71.9m
30 Jun 20 - 27.7m
31 Mar 20 - 12.3m

Timber division
31 Dec 20 - 67.7m (loss)
30 Sep 20 - 3.0m (loss)
30 Jun 20 - 7.4m (loss)
31 Mar 20 - 7.7m (profit)

In summary, Palm Oil division posted PBT 56.7 million (excluding Biological Assets revaluation) whereas Timber division reported loss before Tax 67.7 million in 4th Qtr 2020. Surprisingly, positive cash generated from the operation showed 79 million in 4th Qtr alone.

Timber division suffered 32.7 million losses before taking into account Written Off PPE and impairment 35 million in 4th Qtr 2020. Huge operating losses of 32.7 million could be due to written down of inventories to NRV in Timber division as Inventory showed a staggered reduction of 42 million in comparing with immediate preceding quarter.

Hot money is gradually moving out from Technology sector....and pumping plantation sector.

TAAn earnings was dragged by one off impairment and written off PPE in timber division in last quarter. Lumber price hike is the game changer besides CPO bull.

Information about the Philippines market as extracted from the funds raising in 2018:

1. Philippines has a population of approximately 100 million with no existing tinplate manufacturers
2. Tinplate in the Philippines are mainly sourced from other countries. (China, Korea & Japan)
3. The annual domestic demand is approximately 220,000 mt

JFE Shoji and Nippon Steel don't sell the black plates to outsiders other than their related companies. It is highly capital intensive for setting up black plate production facilities as the products are typically catered to automobile and ship building markets. Black plate for producing electrolytic tinplate market is obviously too small in contributing to the turnover.

Perstima is actually controlled by JFE Shoji, the second largest shareholder and the sole raw material (black plate) supplier. Electrolytic tinplate manufacturing does not require high capital intensive or technology skill. The high bearer of entry is to obtain reliability long term supply of black plate for producing electrolytic tinplate.

Electrolytic tinplate market works in an oligopoly manner. It seems they have a common consensus in setting up a factory in each country of SEA.

Factory capacity per year
1. Perstima Malaysia - 200,000 mt
2. Perstima Vietnam - 120,000 mt
3. PT Pelat Timah Indonesia - 160,000 mt ( controlled by Nippon Steel)
4. Siam Tinplate Thailand - 140,000 mt ( controlled by Nippon Steel )
5. Perstima Philippines - 200,000 mt

Exactly.
Posted by Ben Tan > May 6, 2021 9:37 PM | Report Abuse

Up_down, thank you for your comment. This is very interesting. So what you are saying is that their dividend payout comes 1 quarter later every time?

Ben Tan, Nice follow up with the glove sector. Harta dividend policy is quite consistent with the payout 60%. The latest dividend declared 17.7 cents was derived from 3rd Qtr 2021 EPS 29.3 cents x 60%. Next round of dividend expected is 19.7 cents ( 4Qtr EPS 32.75 cents x 60%)

"
However, the dividend payout for the financial year came at 39.4%, far below 60%. The closest it came to the mentioned 60% payout was in the last quarter - 54%. No guidance or explanation was provided that I could find, neither in advance, nor post factum on where this significant difference came from. I have recently discussed elsewhere that the lack of proper dividend policy for most Malaysian companies makes it all the more difficult for minority shareholders to analyze the companies and the corresponding risks. Such significant discrepancies don't make it any easier."