MRT 3 project will be revised again. Target cost trim down from 50b to 45b.

Secured another RM1.28b project from Taiwan.

There're always reasons why a firm with financial stat looks decent, but selling cheap. It's pretty hard for fund manager or operators bet on SOP in near term due to:
1: Tens of million shares from ESOS sold from 3 and above. Any yet, there're tens of millions ESOS can be exercised anytime. Doubt any fund manager or operators will create another exit windows for them (retailer bought at higher range & ESOS).
2: FFB production is on downtrending, eg: MIB est -5% on y2y basis
3. Very stingy dividend payout. The willingness to share profits with shareholder doesnt happened when they strike very good profits in 1H, what're the chances in coming quarters? Thus, put off long terms & dividend play holders. Management credibility is count to attract this grp of investor too.
3. CPO hype just over on 1H, it take times to complete its commodity stock cycle. FCPO price is on downtrending, the near term best outcome is reaching its stabilization. Dont bet too much on gap between CPO and SBO, as SBO can plunge while CPO maintains flat.

See price action from 2014 peak to 2019 bottom, that's tell commodity stock cycle.

https://www.theedgemarkets.com/article/petronas-doubles-dividend-payout-rm50b-2q-profit-jumps-140-rm23b

Gov shall hv sufficient money to subsidize ICPT. Risk to delay payment is lower.

Seems like market still react to HSBC move out from Quill2 since many months back. Congrate to those do reverse trade.

https://btrnews.co.uk/ecoworld-london-delivers-latest-btr-in-landmark-deal/

Without accessing to detail on contracts, we really can't comment much whether there is cost plus pricing.

Anyway, many raw material like iron ore, copper are declining fast. Steel plunged more than 45% from peak and touching Nov 2020 price range.

With multiple headwind ahead such higher cost on labour, costlier fertilizer (bought on 1H22), higher CPO stock and production rising on Q3, its pretty gloomy fcpo future.

fcpo broke 3.8k, rhb analyst that reverse her stand early this year rise TP sharply to 7.25 need to apology again?

Doubt so, quick scan on AH, Rhb IB, uobkh latest report, non of them mentioned about Air Selangor bid. Stand to be corrected.

bagging another new project - Sg. Rasau Water Supply Scheme worth 1.98 bil.

There might be a technical bounce by riding on coming good QR / potential better dividend. But in mid term, those bought at high 5.x to 6.x are stuck if fcpo floating around 4k+.

Question to ask is why directors are selling if good prospect and dividend ahead, what're the odds these directors with access to first hand information act illogically? They had been dump more than 10+ mil prior Jun, and added 11+ mil new ESOS lately, which likely hvnt digested by market (if they still selling).

Mill operators are expecting cheaper ffb too according to theedge news and sentiment is dampen by Indonesia move lately.

Btw, bonus issue just split the same cake into smaller size, the only advantage is provide better liquidity.

RHB analyst might be sweating again on the wrong reading. Some points to consider:

- Market is flushed with extra 10mil+ from ESOS.
- When fcpo traded at 5.2k range at late Jan 2022, SOP still in sleeping mode and traded 3.5 range
- fcpo was in uptrend back in January, but now is gap down and bearish under 200MA.
- sbo and soybean future all both in downward trend / gap down.

Many eyes on Indonesia policy direction and latest move on accelerate export distribution, known as “flush out“.
https://indonesia.postsen.com/business/54164/CPO-Prices-Drop-in-a-Week-Because-of-Luhut%E2%80%99s-Policy.html

fcpo on downward trend after double top. CPO price might soften further due supply increased (Q3 is peak production period normally, Indonesia increased export permit from 100mil to 225mil tonnes etc). Newly appointed trade minister might be more export friendly after export uproar. Besides, SBO future is soften as well. Watch out EU biofuel mandate too, if they loosening the mandate to counter their energy crisis, it might affect negatively edible oil market.

Ffb is not improving actually compared to Q1. As whole, still on downward y2y due to labour shortage.
Jan to Mar: 293,667 (2020) > 293,781 (2021) > 253,543 (2022 : -14% y2y)
Apr: 107,627 (2020) > 104,553 (2021) > 87,447 (2022: -16% y2y)
May: 113,066 (2020) > 105,111 (2021)> 91,698 (2022 -13% y2y )

@jolynce
For record, after months, bought another batch of Harta using profits from plantation stock. Lets see how it goes as it may get worse after pretty sharp correction. Minor plus point is rising USD may neutralize abit the headwind. Filled 1/2 of desired position.

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Posted by jolynce > 2022-02-10 15:15 | Report Abuse
@kinuxian likewise with regards to utilities, banking, plantation.. managed to take profit, no losses here but generally not happy with the meagre returns from these sectors LOL! Good luck!

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Posted by kinuxian > 2022-02-10 15:09 | Report Abuse

@jolynce
I'm on the opposite, vested in recovery play like utilities, banking, plantation etc. Slowly taking partial profit off from these sectors and park into Harta (earn some pocket money in net with trades). Still long way to go as it merely 1/5 of my desired position.

Company announcement at 29/Apr -
"Outstanding ESOS Options" : 29,850,500 outstanding ESOS options pursuant to the ESOS as at the LPD

one can do the math; I guess ESOS can last for months, since first 5 months of 2022 merely touch 10mil esos.

Then, in 2H, followed by bidding result of Australia Coffs Harbour Bypass, and potential some Taiwan bid. Any success bid shall warrant a rerating. Beside, updates from Penang reclamation project shall be known too after EIA submission.

https://gamuda.listedcompany.com/misc/qr/Q222briefing.pdf

the script probably already written...

https://www.theedgemarkets.com/article/gamudas-highway-sale-conclude-early-endmay-says-deputy-group-md

followed by
special dividend

followed by
https://www.theedgemarkets.com/article/mrt-3-project-be-implemented-turnkey-contract-method-%E2%80%94-transport-minister

some red flag.. CEO keep disposing.

@John Traders are around and those entered at top will be concerning unlike old timer here which had their position at 3-4.
Hot money, and it used to be a low liquidity stock, these will cause higher beta ahead.

https://www.nst.com.my/news/government-public-policy/2022/03/776894/government-approves-mrt3-construction

Gamuda has set a MYR3.5b pre-sales target for FY22. Recent 2 awards had exceeded the target. I think most retail folks are concerning about high material cost. Similar to plantation stocks where everyone overly concerns about ESG and labour shortage back then. Sometime we may over pessimistic and overlook stock price was beaten down too much. Perhaps collects slowly on low tide maybe a good option.

Sold all, let others earn the top dollars. Hv a good weekend.

Cash call via RI, not all institute or retail had sufficient liquidity or go for full subscription.

@enning22 CPO price hike is more than enough to compensate output volume.

Do compared 2022 vs 2021. FY21 about 10% output fall y2y, but NP surged 50%. Seems like they're direct some of their labour to havesting from replanting, that maybe the reason we seeing softer output impact compared to their labour shortage.

@joerakmo Expected. Looks for RHB latest plantation report to find out forward sales positions. For time-being, those without forward sales upstream players will benefited most with high CPO.

Yinson trying do BI, RI, warrants all together, something beyond initial expectation?

https://www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=3233274

4.2 resistance, here we go again.

Seems like something encouraging is on the way, uptrend b4 QR.

@observatory Well written!

@jolynce Same to u. It all depend on expectation and target, so far satisfied with the returns. Not as good as tech in general which may over double bagger, but avoided recent fall as well.

The market kinda plant the ideas to small retailers like us where glove got to wait for ASP stabilized in coming quarter, then potential price war among China players, smaller glove players capitulate, slowing down the expansion to sort out production glut, prior see clearer picture and find out who will be the last standing.

I'm opting for Harta as it equipped with pile cash, better scale of economy and management. Afterall, I'm paying pre-covid price tag for a company making 6bil+ net profit over last 2 years (roughly about 3bil distributed as div) which equivalent buying 2019 Harta with 3bil cash extra + more production lines up and ready, downside is much stiffer competition ahead.

@jolynce
I'm on the opposite, vested in recovery play like utilities, banking, plantation etc. Slowly taking partial profit off from these sectors and park into Harta (earn some pocket money in net with trades). Still long way to go as it merely 1/5 of my desired position.

@jolynce Be realistic, the profits moving forward can't sustain for such high div payout.

@observatory thx for clarification.

Absolute agreed! Banking, plantation is on disadvantage end. During lockdown 20/21 periods, banks are burdened with loan moratorium, while plantation is taxed with all sort of windfall levy and taxes for decade. Both of them recovered from bad years but still had to share the burden of prosperity tax in 2022.

While glove counters had pocket in huge sum of net profit in 20/21. The net taxable amount for 2022 is way more less.


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As a results, many large corporations like banks, insurers, utilities, plantation companies are sharing the burden with glove producers. So glove companies should not complain (although this is scant consolation to glove shareholders who were late to the party)

Nevertheless the prosperity tax still contains some unfair elements. First the profit threshold of RM100m is set at company level. Listed holding companies with many subsidiaries, each with profit below RM100m, can escape this tax. Second the tax is based on fiscal year not financial year. Companies which make a lot more in fiscal year 2021 than calendar year 2022 will have to pay more.

Making 400mil (let says 4x100) annually but pay 350-400mil prosperity tax? Doesn't sound right in maths.

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@observatory
Next quarter should also see Harta reporting a loss for the first time. Assuming profits were to fall back to about RM100 million (like pre-Covid), the one time prosperity tax of about RM350m to 400m will set it back to a loss of about RM250m to 300m, or just about wiping out the profits in Q3 and Q4.

We might see 4.2 resistance again, when fcpo price touched 3.1K back in Jan 2020.

SOP benefited instead.

https://www.theedgemarkets.com/article/sime-darby-plantation-klk-among-upstream-players-affected-indonesias-mandatory-domestic-palm

https://www.cnbc.com/amp/2022/02/03/uk-energy-bills-to-rise-by-over-50percent-in-april-as-ofgem-announces-hike.html

Just chill, and wait. See what's mgmt moves (div, SBB, hoarding cash) with their profits as officially turned into net cash in upcoming QR.

Strong fcpo price merely just reflect 1/3 of QR going to be promising.

'Underweight' call kept on palm oil sector - RHB Research

Accept the fact the divergence between fcpo against SOP price movement since 3.2k back then even net profit had touched ATH for last 2 consecutive quarters.

Just be realistic, plantation been years out of radar, not a preferred sector for fund mgr & financial analyst.

I guess we shall anticipate a negative revaluation in coming QR.
https://www.theedgemarkets.com/article/kpj-revises-down-rental-rate-jeta-gardens-elder-care-homes-australia

https://btrams.com/palm-oil-market-looks-6000-rm/

https://time.com/6139876/hong-kong-hamsters-covid-19/

YoY comparison is looking good, as both cpo and pk is surprisingly stronger although ffb short by 3%+. With low 4Q20 baseline, coming QR might pose some surprise.

Let see if tml fcpo will hit another ATH. If do, do expect recycle headline like:

FCPO break historical high, not sustainable, ESG remain major concerns.

Btw, KLK and IOI both do expect CPO price stay above 4K for FY22.

Start hiring at Sydney, good news coming?

https://www.seek.com.au/job/55353528?type=standard#solHash=0eb850604c530ef98581226b00154c9bb070ef75

https://www.cnbc.com/2022/01/06/eus-plan-to-include-gas-nuclear-in-green-ranking-leaves-investors-confused.html

Wow, look at EU, natural gas and nuclear = green, but ban palm oil in biodiesel.

What a hypocrite.

John, back on envelope calculation, SOP might hit 170-190m in Q4 profit if without surprise. But, do not surprise do happened on FY20 on losses due to derivative & forward sales.

Reason being Q4 avg price are about 741 higher, minus ~30% off for taxes (winfall levy, corporate tax, etc), these are pure profits. Production for Q3 and Q4 likely to similar as if we looking at Oct/Nov data. Thus, these are pure profits translated to around 50mil+.

ESG, CPO price will be soften in Q2 onward likely remains hinder for fund house do rerating. Furthermore, management is reluctant to honor higher dividend so far, with net cash position now, let see what the next.