INNO's management team are more competent than Pinepac. Pinepac does not whole own the plantation business in Indonesia. Its operation keep making loss. Some more, I can't see their FFB growth for the past 2 years even though their young tree entering maturity stage. Don't really know how they take care the palm oil tree.
I consider myself to be an objective person. I seldom jump into conclusion unless there is sufficient evidence. For example, in the case of ivory and London Biscuits, I argued that there is not sufficient evidence to prove bad corporate governance. The two companies might have made some mistakes in the past two years, and they might turn around once they ironed out the kinks. (I don't know whether I am right or wrong, but at least that is how I sort out my thought process)
But in the case of H, there is simply no reason to explain that kind of year after year, consistently subpar FFB yield with that kind of age profile, some more in Sabah. I strongly suspect bad corporate governance as the direct contributing factor (you know what I mean)
Harlen's executive chairman is an 88 year old man. At such age, how he got ability to manage the business operation of the company. Operation has not returned to black even though the FFB production in final quarter was 34% higher than 3rd quarter 2013. It is better for him to step down. If I am not mistaken, he is still drawing 1.45 million salary and the total Directors remuneration about 4 million each year.
Harlen disposed its 2,410 hectares of plantation land in Sabah in year 2013. Their FFB production would be lower this year.
I did a quick check. Golden land has 9359 ha plantation land in Sabah, out of which 8613 ha planted, 6917 ha matured. They also have 8157 ha unplanted land in Kalimantan.
Enterprise value = RM223m equity + loan of RM142m - RM19m cash = RM347m
Value of empty land per ha in Kalimantan let's say RM3000 per ha. Value = RM25m
EV for Malaysian plantation is hence RM347m less RM25m = RM322m
RM322m / 8613 ha = RM38,546 per ha
Of course they have some smallish property projects.
Alex EPS for GL Bhd is higher ie 1.95sen vs Innoprise 1.25sen in latest quarterly report. NTA for GL Bhd also way higher despite share price cheaper. GL Bhd will benefit from current surge in CPO price not Innoprise as most of Innoprise trees are still immature.
Innoprise oilpalm age profile as at 31 Dec 2013 year planted size (hec) percentage matured 5896 43.7 matured in 2014 5209 38.6 immatured 262 1.9 newly planted 2135 15.8 total 13502 100
due to its small market cap, we should ascribe a relatively low EV per ha of RM40,000 (big cap trades at EV per ha ranging from RM60,000 to RM100,000+).
Based on RM40,000 per ha, Innoprise's sustainable market cap works out to be RM40,000 x 13,000 ha = RM520m, or RM2.75 per share
This represents 55% upside from current price of RM1.76
(6) implied PER
based on target price of RM2.75 and FY2015 EPS of 20 sen, PER works out to be approximately 13 times. Which is not unreaosnable for a company with strong dividend payment capacity
Base on the conditions at the time of writing, INNO was seen worth at that TP but valuation change as time goes on. Be liquid and recognize the impermanent nature.
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Posted by Tang Michael > 2014-03-07 15:37 | Report Abuse
Is innoprise sinora or sindora which was taken private two years back........sindora pays very good dividen when it was listed......too sad