Hi Ooihk, because I like to interact with other bright investors and get their thoughts too. And I think this is one of the many purposes to have this forum.
@GS, many funds own UP. EPF, KWAP, ASM, Aberdeen ... Perhaps they don't actively trade, at least not in large volume. Maybe due to liquidity constraint.
@Sardin, they produce 6 to 8 million coconuts a month. So <100m a year. I don't know their ASP. But I can get RM3 coconut from the roadside. Wholesale price should be much lower. Multiply the two you get a ballpark figure. Unless UP coconuts are very different from the roadside coconuts, I guess revenue is less than 10% of FY22 revenue at RM2.5b. Besides, if not mistaken, UP will have to list coconut plantation as a separate segment from plantation segment in the Segmental Information if revenue exceeds 10%. Actually I also have a coconut question. Why is production output stagnant or even decline?
They also faced worker shortage for the last two year, they may use some of the coconut plantation's worker to support the palm operation. This might be one the reason why coconut output is declining.
Hi Observatory, cant expect production output increase because the matured planted area of coconut slightly reduced. Total planted area however remains the same.
Actually I did read the minute before I posted my question. So please don't simply comment. Not only that, I did attend the AGM and asked a few questions.
Opps, my bad, maybe it's mention in year 2021. The 2021 AGM meeting minutes is not shown in website. You can write to them and ask. I attended the both AGM in 2021 n 2022. In one of the meeting the CEO did mention about it. Nation average is 8 ha/worker, UP is 12ha.
Hi Ooi & GS, thanks for the info. Then here are my findings/question: 1. Sime Darby said they now 1 worker for 15 Ha and want to push up to 17 Ha. Quite unbelievable as they are not so profitable. https://www.theedgemarkets.com/node/658064 2. If we sum up the number of guest worker in Malaysia and PTSSS (3231 + 1151 = 4382) divide by matured planted area for both palm oil and coconut plantation (42789 + 3847 = 46636 Ha) give us 9.4 Ha, which is less than 12 Ha. That means, coconut plantation is more labour intensive than palm oil plantation.
Hi Pinky, I think probably because initially the profitability of palm oil plantation is higher than coconut plantation and it takes time to switch more back to coconut and the newly planted area should be close to the existing estate in order to be cost effective. Also, if coconut requires more labour it also discourage the company to do so when in the past years facing labour shortage.
Hi Ooi, ya they missed out coconut selling price for 2022. I tried to ask a local planter here they say wholesale price is RM 1.50 so probably the same or higher for UTDPLT as the quality might be higher and more bargaining power as a much bigger supplier. Of course I could write to them but I don't think they bother to answer because I tried to ask other questions before but received no reply. Maybe I didn't buy much enough of the shares. :)
Sardin, I wrote to them twice, if memory serve me right, it's the commercial dir who replied. response very fast.. Regarding ha/worker, there are workers in R&D n palm oil mill too. No need to calculate yourself. the figure given during AGM should be reliable. They are not like Sime Darby, dare not even provide yield info in their AR. Can you believe these guys.
UP sold coconut at 1.24 in 2021, so 1.5 is reasonable. Most probably the soil is not suitable to for palm oil, that's why coconut is planted. When West coast highway start operation, the value of Pantai Remis coconut plantation will skyrocket.
Fertilizer price is in a downtrend beginning of this year. Hopefully it will have reduce the cost of production significantly in the later part of the year
Normally the share price reflects the future stock value rather than current value. While fertiliser price is in down trend, in short-term the fertiliser cost is not going down immediately because large plantation usually buy furtiliser via contract inked months if not a year earlier. Plus, the FCPO May 2024 has gone down to 3500++. Another cost, which is labour cost, unlike fertliser cost, will only go up and never come down. So future CPO price drop and labour cost increase may outweigh the fertiliser cost reduction. That's the risk of buying at current share price. Yes, we can get good dividend this year and maybe early next year too but what's next?
It takes 7 years for the newly planted trees to reach prime age. Central Banks in many countries including Malaysia will continue to raise interest rate. When interest rate goes up, cosy to hold inventories will be higher. This will discourage the cooking oil companies to keep stock in their warehouse, meaning they will delay the purchase, weakening short-term demand / selling price. Big consumers like Bangladesh, Pakistan are facing economy problem and this may reduce their purchasing power too. So there might be further down side to the 3500++ RM/Mt mentioned above.
Buy or sell decision on a specific price should be based on many factor including one's portfolio and risk profile etc, etc, etc... It could be good for one person but bad for another. What we are discussing here is just all essential information and phenomenon observed, regardless whether or not it is a positive or negative to the share price. Individual investor should further analyse what is the best for them. I believe most of the investors prefer to have all the info or as much info as possible regardless of what decision they are going to make.
Dividend would not and will never be stable, because earning will be highly dependent on commodity price and cost which all of these are variables. What has been stable was the generosity of the board of directors and the major shareholder, I think. But however generous they are, still, what the shareholder is possible to reap still depends on those variables.
Technically also, the force going north has been loosing steam. It has tested the peak 3 times but couldn't get through. In a battle, if you charge 3 times and cannot break through enemy's line, you'd get exhausted and facing the difficulty to hold the line when the enemy charge back.
Good, if price drop below 12.5, I may consider slowly picking up some. Please check your facts, look at their dividend in 2019, 2008 n 2009, then only talk.
From 2014 to 2019, it started with a big drop of dividend in 2015 and then basically in a down trend till 2019. That's why I say dividend cannot be consistent and it depends on the earning. Dividend payout rate can be consistent as it has to adhere to the dividend policy but the amount is subject to change depends on earnings. I think this is a basic that we do not need to argue. And I think people are least interested in who pick up a stock at x price. At any price, there will be a buyer and seller, and ikan bilis like you and me is not going to be able to distort the volume. Unless you are big guy like EPF or a fund manager then only people are interested. However, fund manager doesn't talk like that.
Your investment horizon, needs, risk appetite are diff from mine. I know its a cyclical stock when I invested in UP. As long as I'm ok with the dividend paid and yield during down cycle, it fine for me. Not many can pay a decent dividend during down cycle. That's to me is stable.
Hi Pinky, yes I recalled that. That was the best time to buy compares to now. It is when market get "shocked", "ambushed" (at fair bit of shareholders felt so) without being able to see one year ahead. Similar thing happened to FPI in the last quarter. You wanna make big profit, you gotta have guts during these "crisis" time (when there is no crisis but looks like there is a crisis). If we want to maximize our profit we should not just know how we think but also how other people think.
Pinky, I was shocked too. I wrote to the management. After I received their explanation, I decided not to sell. I add a little bit with partial of the dividend I received.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
GS
279 posts
Posted by GS > 2023-03-23 16:35 | Report Abuse
such world class listed company, i wonder why no fund is buying ?
https://www.theedgemarkets.com/node/660356