9.22*90%/160=5.2%

Every sen counts.

This morning I bought back some MAYBANK for the reasons:

1) MAYBANK is the top weight of ASB, should be very safe and stable.

2) I trade index call warrants and index future, Risk Free Interest Rate is one of the factor that detect their fair value. Therefore I need kind of "fixed income" to back up them. Bank FD is low, REIT I dun like, I think MAYBANK can be a better choice.

I was the very rare one lost money in MAYBANK lor.

HSPLANT dropped to 1.88 on 19th Jan,
The next day, I sold all my MAYBANK at a loss, and managed to get HSPLANT at 1.90, now it is 1.96.

Anyway, I still like MAYBANK for the reasons:

1) The DRIP is less now, only 0.145 for 2022, Cash Dividend Yield = 0.435 / 8.71 = 5%, it is Good.

2) ASB is for Bumi, for those Non-bumi who are not very good in picking stocks, we can just copy ASB portfolio. Read 2021 Annual Report, its top 5 weights MAYBANK, SIMEPLT, SIME, TENAGA and AXIATA, add up already 40% of ASB portfolio. Easy to copy, MAYBANK weight in ASB was 21.51%, what we need to do, 21.51%*100%/40%= 53.78%, do the same for the other 4 weights. OK liao.

If you invest for long term, say for retirement, I think odd lot is not a big problem.
After all, the biggest odd lot at anytime is only 99 units, or about RM865, OK lah.

My consideration:
1) High much the discount is?
2) Is it enough to cover the RM10 Revenue Stamp?

The latest DRIP issue price was RM8.38,
Check the market price on 22.09.2022 was RM8.71,
The discount was 8.71 - 8.38 = 0.33,
Revenue stamp / Discount = 10.00 / 0.33 = 30 units,

If we hold only 3600 units Maybank.
Our entitlement = 3600 * 0.07 / 8.38 = 30 units.
Better take Cash.

Anyway, Maybank announced on 13.10.2022 that the take up rate for latest DRIP was 78%.

For calendar year 2012,
Total net Dividend: Cash 0.06 + DRIP 0.45
Forget about the DRIP, DY was less than 1%.

For calendar year 2022.
Total Dividend: Cash 0.435 + DRIP 0.145
Forget about the DRIP, DY now is 0.435 / 8.74 = 5%

Significant improvement, time to invest MAYBANK now.

Regarding DRIP,
1) If you insist it is Dividend, then it is followed by a mini scale of Right Issue, at the end you do not receive Cash.
2) Or you can treat it as mini scale of Bonus Issue, you receive no Cash.
3) If you think that you can sell off the extra units from DRIP, then what is the difference from mini scale of Bonus, you also sell off the extra bonus units.

My Simple Calculation:

KLCI's Dividend Yield is now about 4%,

If your annual expenses is 100K,
When you have an investment portfolio = 100K / 4% = 2.5m.
You can retire immediately, as I believe Dividend will grow faster than inflation.

If you really want to retire badly, then include EPF into the calculation.

I like HSPLANT because it has huge pile of cash and 60% dividend policy.

Also, HAPSENG big boss is very rich, I think less likely swindle money from HSPLANT.

It is also relatively transparent compare to other mid and small cap planters, e.g. disclose numbers like the cost of production.

10 years ago, on 31.12.2012,
HSPLANT Planted Area EV / ha RM64K

Today,
HSPLANT Planted Area EV / ha is only RM39K

Market price for Oil Palm Estate in Sabah is around RM80K.

Go back to same example,
Before DRIP, you have 12000*8.80=105,600,
After DRIP, you have the same value of 105,600
The only difference is you now have 16800*6.29.
So where is the dividend?
And because no money flow out, you do not know the company healthy or not.

Of course I still say the DY is only 4.9%.
If we are so simple minded, any company can trick us by declaring high dividend and DRIP with huge discount,
and at the end the company does not need to fork out any money.

Then why did you say "would be RM42,240 richer than before"?
Are you OK or not?

After getting your 4800 units, the price would still be RM8.80?
Why not they buy at RM8.80 before the ex-date?

Now, my turn to ask you back the same question,,
What did you study in university?

Come on,
You have now 16800 units, but still the same 0.00010% ownership,
You sell off the 4800 units, your ownership become 0.00007%,
So you are actually disposing part of your ownership for cash.
Is this called dividend?
To me, dividend is the cash that I receive from the company, without reducing / affecting my ownership.

We look at DY because we want to know the company is in good health or not?
We want to know if the company are able and ready to pay out cash to shareholders?

But in the above example, we do not receive Cash and the company do not pay out Cash.
May be I have mistaken, I should have said DRIP is kind of mini bonus issue.

Haha....you people really think that I do not know I could opt for cash instead of DRIP?

Let say Maybank announce RM1.00 interim and final RM1.00 dividend for this calendar year 2023,
and say 100% eligible for DRIP at issue price RM5.00,

According to your understanding, the DY = 2.00/8.80 = 22.7%,
But for my calculation, this year DY = 0/8.80 = 0%.

Now, say I have 12,000 units Maybank or in percentage = 12,000 / 11,885,000,000 = 0.0001%,
My entitlement = 12000*2.00/5.00 = 4800 units, or 40%,
As there is huge discount, almost everyone would opt for DRIP,
Meaning everyone get extra 40% units, and my ownership in maybank is still = 0.0001%,

So what actually do I get?

The Dividend Yield of Maybank should be calculated from the cash dividend only.
The portion that eligible for DRIP actually is not dividend, but kind of Right Issue.

For the last 2 dividend payment, the Cash and Drip dividend are 0.225+0.075 and 0.210+0.07,
Most people just conveniently said the Dividend Yield = (0.3+0.28) / 8.80 = 6.6%,
For me, I take only the Cash Dividend for Calculation, DY = (0.225+0.21) / 8.80 = 4.9%,

My way of calculation, show that Maybank DY has increase tremendously,
Therefore, I have recently bought Maybank.

Not liquid at all.
Right now at 10.05AM,
Bid #1: 100 at 1.96
Bid #2: 23 at 1.94
Bid #3: 20 at 1.93
Ask#1: 17 at 2.00
Ask#2: 50 at 2.01
Ask#3: 10 at 2.02

Bid and Ask are 4 sen apart.
Already one hour, not traded yet.
How to buy 1000 small lots?

https://klse.i3investor.com/web/staticfile/view/485420

Today KENANGA maintain giving target price 2.50 to HSPLANT.

Let say on 19.10.2005,
If a person is to invest for retirement survival purpose,
Most probably he would go for banks, as all sectors/businesses deal with banks.
Meaning their performance should be the average of all.
For safer, he would select MAYBANK, as ASB is the major shareholder,

Check Yahoo Finance, the adjusted price of MAYBANK on 19.10.2005 was 2.92,
Therefore CAGR from 19.10.2005 to 05.01.2023 is 6.60%.

Check from ICAP website,
Both adjusted NAV and Price on 19.10.2005 are 0.91.
And NAV and Price on 05.01.2023 are 3.34 and 1.97.
Therefore CAGR for NAV and Price are 7.85% and 4.59% respectively.

However, a retiree need to withdraw money periodically,
Therefore if he invest in ICAP, price is more relevant compare to NAV.
Obviously MAYBANK is a better choice for him compare to ICAP.

If that guy invest PBBANK or HLFG instead of MAYBANK on 19.10.2005,
Then the CAGR are more than 11%.

For more than 10 over years, the benchmark they used for comparison was KLCI.
But I found that they now have changed the benchmark to MSCI Malaysia.
I did my calculation, and found that the difference in CAGR is about 0.7%.

https://klse.i3investor.com/web/blog/detail/savemalaysia/2023-01-04-story-h-301980358-Undervalued_small_and_medium_cap_plantation_firms_potential_M_A_targets

In the above article, Maybank IB said a notable privatisation candidate is Hap Seng Plantations Holdings Bhd, as it trades at an attractive EV of RM33,255 per planted hectare, a P/BV of 0.81 times, and with net cash of 54 sen per share.
_______________________________________________________________________

1) Guess the possible offer prices and EV/ha.
HSPLANT was listed in 2007, the retail and institutional IPO prices were RM2.65 and RM3.05.
Let say HAPSENG now offer to buy back at RM3.05,
Then the EV/ha = (3.05*799.69m +501m - 642m) / 35434ha = RM64900/ha,
Still 19% cheaper than the market price of RM80000/ha in Sabah.
However, the offer price RM3.05 is already 58% higher than market price of RM1.93.
Retail investors should welcome such offer.
_______________________________________________________________________

2) HAPSENG afford to offer so or not?
They are now holding 556m HSPLANT shares,
Meaning there are only = 799.69m- 556m = 243.69m shares not owned by HAPSENG.
Therefore the amount required = 3.05*243.69m = 743m
Look at HAPSENG latest balance sheet, they have about 3000m cash and money market.
HAPSENG definitely can afford to privatize HSPLANT.
Then HSPLANT has cash and money market of 499m.
After fork out 743m, then get back whole lot of 499m, the net flow out is only 244m.
244m is chicken feed for HAPSENG.

KMLOONG is more like a palm oil mills company than a plantation company.

It produce only about 28000mT FFB a month.
28000mT / 1780m market cap = 16mT/million.
Very low compare to other plantation companies.

Now, Let say HAPSENG wants to take HSPLANT private or sell it off.

1) At market price, EV / ha = RM80000,
Then the share price = (0.08*35434+642-501)/799.69 = RM3.72 / share.

2) At cheaper price, EV / ha = RM70000,
Then the share price = (0.07*35434+642-501)/799.69 = RM3.28 / share.

3) At a very cheaper price, EV / ha = RM60000, (I think very unlikely that cheap)
Then the share price = (0.06*35434+642-501)/799.69 = RM2.83 / share.

Quarterly Report: 31st December 2012:
Share Qty: 799.98m
Share Price: RM2.82
Market Cap: 2256m

Total Liability: 228m

Total Current Asset: 196m

Enterprise Value (EV) for Oil Palm Planted Area: =2256 + 228 - 196 = 2288m
Total Oil Palm Planted Area: 35551ha
EV per ha: RM64358 per ha
________________________________________________________________________________

Now, 10 Years Later:

Latest Quarterly Report: 30th September 2022:
Share Qty: 799.69m
Share Price: RM1.86
Market Cap: 1487m

Total Liability: 501m

Total Current Asset: 684m
Biological Asset: 42m
Net Total Current Asset: 684 - 42 = 642m

Enterprise Value (EV) for Oil Palm Planted Area: =1487 + 501 - 642 = 1346m
Total Oil Palm Planted Area: 35434ha
EV per ha: RM37986 per ha
________________________________________________________________________________

Discussion:
1) In 10 years time, the EV / ha reduced 59% from RM64358 to RM37986.
2) The market price (EV / ha) for Sabah Oil Palm is around RM80000.
3) Base on EV calculation, HSPLANT is very cheap.
4) The FFB production for Year 2012 is 665812mT.
5) Now, the current 12 months FFB production is 572351mT.
6) HSPLANT said the FFB production for Year 2023 would be 670000mT.
7) However, an analyst is less optimistic, and predicted 630000mT.
8) HSPLANT has 60% Dividend Policy, YTD, the EPS is 23.94sen,
9) Already paid 5sen Dividend, Can expect at least 23.94*0.6-5 = 9.36sen.

Uncle,
Did you previously think CPO could stay at 5 or 6K for many years?

Sorry, it is written in Chinese.
I copy from my facebook posting.

冷眼大师在他的书“股票投资正道”的“股票伴我老”中提到。。。
时间点应该是2011年。。。

他说以1.00的股价买入8000股CEPAT。。。
既是花8000就能间接拥有了一英亩油棕园。。。
他是直接把公司市值除于25000英亩油棕园而算出8000的。。。
而当时油棕园的市价是一英亩20000。。。
所以买CEPAT股票更划算。。。

11年过去了。。。
现在CEPAT的股价是0.70。。。
但是它曾经有发“2给1”的红股。。。
所以当年的1.00其实是等于现在的0.667。。。
11年间，股价从0.667涨至0.70，惨不忍睹。。。
再加上一点点的股息。。。
每年的总回酬率才三点多巴仙。。。

现在沙巴油棕园的市价是每公顷80000，等于一英亩约32000。。。
现在马后炮，当年买油棕园比买CEPAT更划算。。。

那么，现在应该买CEPAT股票或者直接买油棕园呢？？？
这些年来，CEPAT的财务表是更好看了。。。
单单Current Assets就已经高过Total Liabilities。。。
而且公司又多了12MW Biomass和4MWBiogas发电。。。
签有合约卖电给沙巴电力公司。。。
这是稳定收入，尤其当棕油价钱低迷时更重要。。。

其实，我们不应该直接把公司市值除于公司油棕园的。。。
应该先算，
市值+Total Liabilities - Current Assets - 发电厂等等。。。
才来除于公司的油棕园。。。
那就算到每公顷16652或每英亩6739。。。

11年前，每英亩8000对20000。。。
现在是每英亩6739对32000。。。
看起来CEPAT是更诱人了。。。

冷眼大师是无牌的，我也是无牌的。。。
都不能给买卖建议。。。
大家买卖之前先问股票证卷行和分析师的意见。。。
买卖自负。。。

It is just how you call it.
Investment banks do provide price targets.

With good profit, the balance sheet improve further,
Therefore, EV / planted ha reduce further to = RM46,213 / planted ha.

Calculate the other way round, suppose the planted estate worth RM80,000 / planted ha,
Then the fair price of HSPLANT = RM3.75,
Fair price / market price = 3.75 / 2.23 = 168%.

I expect EPS for 2nd Q = 9.6 sen, excluding any one off gain / loss.

On 21 Feb 2020, KMLOONG provide Basis of and Justification for the Purchase Prices.

1) Boustead Rimba Nilai Sdn Bhd, a wholly-owned subsidiary of Boustead Plantations Berhad, had on 1 August 2018 entered into a sale and purchase agreement for the acquisition of oil palm plantation lands
comprising 17 land titles measuring a total of 12,144.99 acres in Districts of Beluran, Kinabatangan, and Labuk & Sugut, Sabah together with a palm oil mill and buildings erected thereon as well as moveable assets, machineries and vehicles for a consideration of RM397 million. The location of the 17 pieces of land are scattered and not in one location. More than half of the oil palm planted on the land are old mature tree and need to be replanted. The market value for the plantation land excluding the mill is RM348.3 million as at 1 July 2018 or approximately RM28,678.49 per acre.

2) Pontian United Plantations Berhad, a wholly-owned subsidiary of Felda Global Ventures Holdings Berhad, had on 8 June 2015 entered into a sale and purchase agreement for the acquisition of, amongst
others, a piece of oil palm plantation land located in the District of Beluran, Sabah measuring approximately 2,066.05 acres for a consideration of RM71,720,000.00, that is approximately RM34,713.00 per acre.

In February 2020, that time FCPO was around 2500 - 2700.
KMLOONG announced that they were buying 5 pieces of Land in Sabah.
The purchase was completed in May 2022 for 4 pieces, and 1 piece was terminated.
The price per Land Area was 80000 / ha.
The price per Planted Area was 84500 / ha.

My opinions, for Sabah based plantation companies, if
1) The boss can be trusted and the company is properly managed.
2) The balance sheet is reasonably OK, not too much debts.
3) Dividend Yield not less than 2%.
4) EV / Planted Area is lower than 60000/ha.

Can buy some shares lor.

For apartment, we expect higher rental yield, may be 5%.
But for landed house, we expect lower rental yield, may be 2% as we expect the land will appreciate.
Same to stock investment, we expect lower dividend yield from plantation companies..

What banks have is mostly money, money will depreciate by time.
Of course they own their headquarter and may be a few other buildings.
So, if you want to go for banking sectors, why not consider Singapore banks?

My way of evaluating plantation companies,
by comparing EV (enterprise value) of their planted oil palm estates.

My formula may be a bit different from others.
EV = market cap + total liabilities - current assets - other non-related business.

For TSH,
EV = 2214m
Planted oil palm estate = 42,495 ha, 15% in Sabah, 85% in Indonesia.
Therefore, EV / ha = RM52,111 / ha

For HSPLANT,
EV = 1761m
Planted oil palm estate = 35,434 ha, 100% in Sabah,
Therefore, EV / ha = RM49,708 / ha

As I know, the market price for planted oil palm estate in Sabah is around RM80,000.
So HSPLANT is cheap.
But for Indonesia, I do not know the market price / ha.
It is better not to take risk, I think HSPLANT is the better choice.

One more important thing,
HSPLANT has a 60% dividend policy,
I estimate the EPS this year would be 36 sen, or dividend = 60%*36 sen = 21.6 sen.
Meaning after collecting the 21.6 sen dividend, the EV / ha would be even cheaper.

My way of evaluating plantation companies,
by comparing EV (enterprise value) of their planted oil palm estates.

My formula may be a bit different from others.
EV = market cap + total liabilities - current assets - other non-related business.

For TSH,
EV = 2214m
Planted oil palm estate = 42,495 ha, 15% in Sabah, 85% in Indonesia.
Therefore, EV / ha = RM52,111 / ha

For HSPLANT,
EV = 1761m
Planted oil palm estate = 35,434 ha, 100% in Sabah,
Therefore, EV / ha = RM49,708 / ha

As I know, the market price for planted oil palm estate in Sabah is around RM80,000.
So HSPLANT is cheap.
But for Indonesia, I do not know the market price / ha.
It is better not to take risk, I think HSPLANT is the better choice.

One more important thing,
HSPLANT has a 60% dividend policy,
I estimate the EPS this year would be 36 sen, or 60%*36 sen = 21.6 sen.
Meaning after collecting the 21.6 sen dividend, the EV / ha would be even cheaper.

True, SIMEPLT value is in its estate land,
However, I think may be 200K / acre is only for those small piece of land very near to town.
I might buy SIMEPLT if it goes down below RM3.50.

For larger piece of estate land, eg. United Malacca sold 1021 ha Freehold (Melaka / N.Sembilan) at 171,000 / ha only.

For any business:
1) High profit margin would not be maintained for long period.
2) Narrow (and loss) profit margin, would also not last for long time, unless such business is no longer needed.

Calvin is correct, no doubt plantation high profit margin could last a bit longer compare to glove.

As the price is coming down, we need to look at 'biological assets' in the quarterly reports.
Especially to those companies which have high ratio of = FFB production / Market Cap.
In general, plantation companies with high debt, and those small companies have very high FFB / M.Cap ratio.

When the palm oil price went up, biological assets also went up, contributed significantly to the net profit.
Now the price is coming down, the biological assets come down too, will cause the quarterly result look very bad.

Considering this point, I have sold all my SWKPLNT, and buy more BKAWAN.

I believe big profit margin of any business will not last for long.
Same to loss making (price below of cost) also will not last long, unless we no longer need that product.

That was why when I evaluate plantation companies, I predict the price will soon converge to 10 years average (net of cost increment).

At this moment,
US Soybean Oil =72 cents / lb
USD / MYR = 4.40

In RM / mT = 0.72 * 2204 * 4.40 = 6982 RM / mT.

However historically palm oil was 15% discount to Soybean Oil,
Therefore Fair CPO price = 0.85 * 6982 = RM5935,

The current CPO down trend is due to Indonesia.

By 31.03.2027
My prediction is that CPO will be around the current 10 years average (Net of Cost Inflation), i.e. 2800.

The meaning of Net of Cost Inflation is that,
If the cost in 2027 is x% higher than now,
Then the actual CPO would be (1+x%)*2800 in 2027.

BKAWAN and SWKPLNT would be the cheapest now and also in 2027.

I give different fair PE Ratio for the following reasons:

1) 12 times for BKAWAN,
Excellent management,
But fund managers are not interested to invest, as the trading volume is low,
Difficult for Fund managers to buy and sell.

2) 20 times for KLK,
Excellent management.

3) 25 times for SIMEPLT,
Biggest plantation company and own big estate lands in Peninsula.

4) 12 times for SWKPLNT,
Small company,
Pay good dividend,
Excellent management from TAANN,
Sarawak Government might help to get Indonesia worker,

5) 15 times for TAANN,
Mid Cap company,
Pay Good dividend
Excellent management,
There are fund managers interested to invest in this company.

True, the value of SIMEPLT is in its estate lands in Peninsula,
That is why I give fair PE of 25 times to SIMEPLT versus KLK's 20 times.

Aiya, look like CPO will plunge faster than what I have predicted earlier.

When paying dividend, what happen to:
1) The company: An amount of cash money flowing out.
2) The shareholder: Receiving cash money.

When buying back shares, what happen to:
1) The company: An amount of cash money flowing out.
2) The shareholder: No change in number of shares but ownership become higher in term of percentage.

The case of TOPGLOV.
1) Spent 1.42b to buy back 200m shares over the 5 months span, or about 2.5% of total o/s shares.
2) If you hold 100,000 shares and you do not agree with the company on share buy back.
3) Then you could have sold 2.5% or 2500 shares and received around RM17,750.
4) That RM17,750 become kind of dividend, and you maintain the same ownership in term of percentage.

So, to me, Share Buy Back is kind of dividend payment.

KYY said the company sold forward its refined products and then the crude oil shot up.
Wondering why can't the company buy crude oil at the same time they sell forward its refined products?

KYY said the company sold forward its refined products and then the crude oil shot up.
Wondering why can't the company buy crude oil at the same time they sell forward its refined products?

skoh888,

My way of valuation.
I copy the market FCPO prices, AUG 2022 to FEB 2023, to my spreadsheet.

But for MAR 2023 and beyond,
I do not take the market prices because sometime the volume is thin, and therefore not meaningful.
What I do is to apply a formula so that from MAR 2023, the prices would converge to 10 years average price.

The latest 10 years average CPO price is RM2761, no need to adjust to inflation, as my calculation is also assume the production cost remain the same.

Now we can estimate the EPS for the next 5 years (20 quarters),
Discount all the future EPSs back to today by a rate.
Then the furthest quarterly EPS x 4, will be multiply with reasonable PE ratio, again discount it back to today.
I prefer PE Ratio for: BKAWAN=12, KLK=20, SWKPLNT=12, TAANN=15, SIMEPLT=25

Sum up all the above and there I get the today's fair value for the companies.

Beltland,
If I did not make money from call warrants and future index,
I would have died from hunger many years ago, so no need blessing from you.

Beltland,
True, I am jobless for more than 10 years already.
My "full time job" now is trading call warrants and future index.
So, no need another job.

Beltland,
skoh888 in his post have explained that "profit is derived more from the market making and spread activities".
The Youtube video link that I put here also explain IBs would not earn money that way.
What to do with the Pasar old lady selling kuih? You look down on them?
What an arrogant person you are.
Telling what financial theory?
You are joker?

Beltland,
I don't even leave a comment here, why did you want to mention me here?
skoh888 have also explained that "profit is derived more from the market making and spread activities".
The Youtube video link that I put to Calvin post also explain IBs would not earn money that way.
What to do with the Pasar old lady selling kuih? You look down on them?
What an arrogant person you are.
Telling what financial theory?
You are joker?

Calvin,

You said "After IB banks have bought enough glove shares to hedge then only glove bull run resumed"

If what you said is from reliable sources, they should have learned the painful lesson, the big bosses should have scolded the managers and from then on they would buy mother shares immediately to hedge against any call warrants that they sell. Logically the history will not repeat so soon on plantation counters.

And myself believe that from the very beginning, the Issuers want "Sure Win" and "Kia-Su", they immediately hedge against any call warrants that they sell.

Sell Call Warrant without hedging or so-called Sell Naked is subject to unlimited losses.