In my opinion, the chances of miss management is not high considering the fact that the board has many years of experience in the palm oil industry and Mr Mak Chee Meng was dedicated to take care of the green field development of the entire project. I also rule out the possibility of labour shortage. I notice that the sector include oil milling too. I think the losses (2020 - 12.7mil & 2019 - 19.7mil) and the last Q we have a small profit of 1.7mil was due the high new planting cost & start up cost of the oil mill.
They are suppose to get more aggressive last year in planting and I'm disappointed to note the low planting acreage of only 200 Hectares for 2020.
The lower revenue QoQ is due to lower production. The production for next Q onwards should be heading north. Hopefully, the oil mill will achieve better economy of scale with higher production.
Utilization rate for our refinery plant in 1Q21 is 10%. This segment recorded a higher revenue of RM58.3 million & a profit of 851,000. Any comments????
Orderbook at SPV segment, on the other hand, swell to RM138m as at 30 Sep 2021 (from RM70m as at 30 Jun 2021), due to new contract secured (amounted to ~RM77m, which will be recognised over the next 2 years).
Correctloh...if u factor in increase in cost of 10%...the production cost of CPO is Rm 2750 m/t.
Current CPO future 12 mths average ( Average from future Jan 2022 to Dec 2022) pm 4250!
U still talking about very outstanding Gross Margin of about 36% compare to usual 10% mah!
Plantation will record sky high profit going fwd loh!
Btw...usual norm of cost of production is only around Rm 2200 per tonnes!
Posted by Johnzhang > Dec 10, 2021 11:33 AM | Report Abuse
Some Investors may be concern of the labour and fertilizer cost increase on plantation company’s performance in 2022. The IBs and media are very prone to look at only one side of the equation and they seriously lack professionalism.
My view is oil palm plantation will still be laughing to the banks next year. Mind you that most big time CPO traders expect CPO to trade above $5,000 during Jan-Mac 2022 and between $4,000 to $5,000 during Apr-Dec 2022.
Cost of production (at estate level) during recent years (2017-2020) were $1,500 -$1,800 pmt CPO depending on the cost efficiency of each planter. Average CPO price over same period (2017-2020) was about $2,490 pmt as shown in the calculation below : 2017 $2,800 2018 $2,150 2019 $2,250 2020 $2,760 ----------------- Avg $2,490 ================= Therefore, average Gross Margin in past recent years enjoyed by planters were $990 to $690 pmt CPO. (ie average CPO price $2,490 minus cost of production $1,500 to $1,800).
Due to higher labour and fertilizer costs, the cost of production is expected to increase by max. $300 pmt CPO basis. The new cost of production for 2022 shall be $1,800 -$2,100 pmt CPO. Based on 2022's CPO price forecasted by big time CPO traders averaging $4,500 , the Gross Margin of the planters will be $2,700 to 2,400 pmt CPO.
2022's Gross Margin is 2.7 times to 3.5 times higher than the average of 2017-2020.
Pergerakan price pon cantik, market sentiment pon cantik(KLCI in bullish mode), CPO in raging bull with this scenario its pointing to one solid conclusions that palm oil company & company its related will show bullish quarterly result for first or second quarter 2022.
The scenario is same like 2012,when world economy move out from Lehman Brothers Crisis, the inflation were high during decade ago, cyclical commodities like oil, gold & palm oil were rallied to all time high as World move from crisis.
I'm my humble opinion & experience, the commodity bull will stay for another 16months-24months before its subside, ride those commodities related stocks before its gone & don't buy at peak OK.
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....