TDM is not the only plantation company that posted disappointing results in the most recent quarters. If you go through other financial reports, most (if not all) plantation companies are affected by the low CPO price in Jul-Sept period.
In terms of valuation, all plantation stocks are currently trading at a high PE multiple (for those that still managed to record profit) or in TDM case, negative PE. This is reflective of the downturn cycle of the plantation industry. I don't think that the industry will reverse their down cycle anytime soon given the general demand of the commodity is expected to go down in the future. China for example, is negotiating with US to take in more agriculture products from US which would potentially include soybean (or soybean oil). In general, Chinese consumption of oil would not actually go up that much. So the increase of soybean oil import from US to China would actually be at the expense of other oil commodities from other countries (in particular palm oil from Indonesia and Malaysia). Another issue is on the European demand of palm oil which is expected to go down exponentially given the proposed ban of palm oil use in food and transportation industries in the future. They have already agreed to phase out the use of palm oil in transport fuel by 2030. Some countries like France and Norway have already started to move away from palm oil.
With this in mind you need to have a slightly long-term investment horizon when buying into oil plantation companies like TDM as the return to upcycle might not be in the near future. 4Q18 result will most probably still be in the negative territory.
MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 7.0x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.
FY19 growth will be driven by the still high demand of the new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. The recent announcement of closure and potential disposal of the loss-making alloy wheel manufacturing business alone is expected to boost the company’s profit by an additional RM20mil. I am projecting a profit to shareholder of RM170 mil for FY19 which at the current price values MBMR at only 6.0x PE.
Please go through the analyst reports and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analysts is around RM3.50.
this stock can only play short term. long term sure die. TDM problem is bad management, segmen good will only let this company die slower. Will be PN17 very soon.
In Year 2018, our total palm oil export to the world was around 18.4 million tons. China just increase their portion for another extra 1.62 million tons. To be precious is it 8.8%+ increased. However, the effect will not be so soon to be reflected in the company report. For long term, it is definitely a good sign for CPO counter.
Trend for palm oil courter next week sure fly 0.23 should be no problem
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Posted by mfbs > 2019-02-20 08:04 | Report Abuse
today can go 22 cent??