Most plantation Cos reported decline in profit in last qtr ranging from 84% to 45% while average CPO price was RM3800/tonne so the next qtr it may be a small improvement only unless CPO price shoot past 4500 in the month of September !
Maybank IB stop loss 3.43 for this stock was hit on 7 September. For me, looking at the chart, this stock likely sideways or down trending. TaAnn holders revisit if you are trading coz short term not looking too strong.
Over the years I have invested in companies involved with plywood. I then figured out that those who will survive are those with access to timber. Those companies who rely on buying timber from third party suppliers will have a tough time. Just look at what happened to Cymao (now Annum) and Eksons. Ta Ann is lucky to have timber operations.
TAANN looks like a decent company to own in its entirity, as part of a long term diversified portfolio. I like it for many reasons, some already mentioned here. However, it is cyclical in that its earnings depends on CPO prices as you can see from its historical stock price the past 2 decades - on 1/1/2000, the stock open at 2.75 and today it is 3.27 and after 23 years, a gain of 52 sen is not the kind of stock that Warren Buffett would buy and hold forever.
It is clear that during good times, this stock price can soar - like 2007, 2012, 2016 and 2022. The prices can be as high as RM4+ to RM6+ peak.
During bad times, this stock can tank - like 2001, 2003, 2009, 2018, 2020 ... hard to define the bottom, but this is when price is say RM2 or below.
So, this stock is for trading. How much profits you make depends on Mr Market. If price goes down to RM2 or lower, then, this is great time to make a killing ... if price only drops a little down to RM3, then, profit is smaller.
Like this recent buy/sell @ 3.28/3.66 a minor one, with small profits, small position. Nevertheless, I keep an interest in this stock by holding a small position for now, waiting for the time when Mr Market is highly pessimistic to add, and sell when Mr Market is highly optimistic.
Ironically, IB is likely to recommend the opposite - they will tell you to buy when price is high and rising (but near peak typically) and then tell you to sell when price has dropped with losses (and typically, it's more than halfway near bottom already).
For a great company like this, let price guides you when to buy and when to sell.
At the current environment, what is interesting is how low will TAANN get over next 12 months. Starting from Monthly charts (looking at past 23+ years), the obvious target is around RM3. I think there's 45% chance to hit RM3, 55% chance it won't hit that level, and if it hits RM3, the next 3 year payout is around 33% price gain + 6% dividend yield p.a., so, say 11%+6%~ 17% 12 month returns. Next major support is around RM2.50. Harder to imagine getting hit here, maybe 20% chance? 80% chance it won't touch. But if it hits there, my position will be bigger and if it gets back to RM4 in say 3 years, my yearly gain is larger ~ 17%+6% ~ 23% p.a. returns over 3 years. As for RM2, I think extremely unlikely in next 12 months. I give it only less than 5% chance, 95% chance won't happen. But if it happens and gets back to RM4 in 3 years time, the returns ~ 26%+6% = 32% p.a. returns over years
These are just rough concepts in my head, how I think about stock market investing. I am a firm believer that Market decides how much returns I get and not solely on me. Market decides 80%, me only 20%.
The above numbers are concepts only - in reality, I will average down on this stock, so, if price hits RM3, my cost is higher than RM3, say RM3.1, and if price hits RM2.5, my cost will probably be around RM2.8 (?), and if price goes down to RM2, my cost may be around RM 2.5 (?), so, when price goes back up, the gains are not as large, but at the same time, when price are low, the dividend yield is higher than 6%, so, there are some partial offsets. But at the bottom, my holding will never be greater than 5% of my stock portfolio (occasionally 6%) so that if this stock goes bust, I can still recover.
Drilling down to weekly charts over past 5 years, you get a better sense of how low a stock could go. On Monthly chart, I thought RM3 was strong support, but on weekly chart, it's RM3.03 - so, you fine tune. But I still think a minority (45%) chance to hit RM3.03.
Drilling down to daily charts over past year, you see some minor supports around 3.18-3.20, so, this one has 49/51 chance of getting hit I think. It's a coin toss for me, I got no clue whether it'll go down that low but it feels like 49/51 chance? If it gets there, I'll add a little bit, as my holding is still small.
So, I do this for only a very small number of selected stocks - it must be companies that I would be happy to own in its entirity meaning on current market cap of say 1.45 billion, if I have that much money, I would like to own this company in its entirity i.e. the lower market price falls, I will keep accumulating.
However, there are not that many companies in Bursa like this quality.
The other thing is I assumed 3 years recovery. Sometimes, it stretches to 4 years, or 5 years, or 6 years ... the timing is also decided by Mr Market and not me. So, it has to be with long term monies like EPF type monies that you don't plan to spend.
India is the largest importer of Malaysia’s CPO and they really need our help as Shah Rukh Khan, Amitabh Bachchan, Aamir Khan, Salman Khan, Kajol, Priyanka Chopra, Deepika Padukone etc needs help urgently. Their Capati and Tossie does not taste the same without Mabel Oil.
Right now Malaysia can only be able to export about four million tonnes to the country. Sarawak, please work harder, we need to increase another 2 million tonnes.
Mabel Oil Production: MPOA 1-20 October 2023 Peninsular Malaysia: (+) 4.83% Sabah: (+) 4.26% Sarawak: (-) 0.54% East Malaysia: (+) 2.99% Total Malaysia: (+) 4.14%
Hahaha nowadays investors are div hungry. Good earnings but no or miserable div also no good don't tell people to hold long if you can't give good div when you have got good earnings people will still bypass it 😀
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....