Company : Hap Seng Plantation Bhd
https://www.hapsengplantations.com.my/
Business
:
Oil palm
plantation and production of Crude Palm Oil. Owned 4 RSPO certified palm oil
mills. Plantation mainly in Sabah. See map below. 90% of the planted areas are
mature oil palms.
Fundamental
:
5 years
revenue chart is as below. Peak revenue was in 2017 of RM555 million.
Interesting
to see that CPO price was peak at RM3300-3400 per tonne in the period of Nov
2016 to Feb 2017. Average throughout 2017 was at RM2700 per tonne. The revenue
recognized the CPO price fully in 2017.
Share
Price:
Price
bottom at RM1.20 in April 2020 (COVID + Lockdown). It was then slowly on uptrend
till RM2.00 (May 2021). 5 years price charts shows peak price at RM2.60 in Oct
2017. Bear in the mind the CPO price at that time is only RM2700 per tonne! I estimate
there is room of RM0.50 to go until end 2021 or early 2022.
1
year chart
5 year chart
Profit:
Last
3 quarters of showing profitability of 34.3mil, 25.1 and 37mil. This is good
signal that the worst is over for CPO and probably looking at commodity Super Cycle?
The company has a dividen payout policy of 60%. I forecast to be 11 cents
similar to 2016-2017 which is an attractive 5%.
Prospect/outlook 2021:
Following
are extracts from their 2020 annual report.
My 2 cents:
Share price is not fully reflected the high CPO price of RM4500 per tonne. The revenue was RM555 million in 2017 with CPO price of RM2700 per tonne. Conservatively estimate the CPO price for 2021 at RM3500 per tonne, revenue will comfortably exceed RM555 million and share will worth more than current price RM2.00 (May 2021). Not to mention that crude oil is trending higher and definitely will support CPO price as Indonesia will use more CPO for biodiesel. Of course there are risks of weather, labour shortage etc but I think worth to take.
Year |
CPO (RM/tonne) |
Revenue (million) |
Peak Share Price |
2017 |
2700 |
555 |
2.60 |
2021 |
3500 ?? |
??? |
?? |
At
time of writing, I own HSPlant shares. Buy at your own risk.
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