HS Plantation - 28 May 2021

HS Plantation had released Q1 report recently. The turnover is 121.3 million with 29.4 million profit. See chart below.

Source: MalaysiaStockBiz

Interesting to note that their CPO selling price was RM3854 per tonne which was significantly higher than other plantation companies. See below note in the Q1 report note.

Compare to last quarter (Q4 2020). The sales revenue has dropped which is a bit surprised. However if the subsequent 2 quarters can pick up at RM150 million, the chances to hit RM500 million revenue is high.

Simple explanation of the lower revenue can be shown as chart below.

The revenue is the factors of sales volume and CPO price. I think the lower sales volume is partially offset by high CPO price. I personally prefer high CPO price with lower sales volume than high sales volume but low CPO price.  This is because higher CPO price will give better profit margin as you can see from chart above.

The lower FFB is mainly due to wet weather condition. Coming June is production peak month and stock will increase (according to research house).  Hopefully this will boost up the sales volume. CPO price still high at RM4216 per tonne on 27 May 2021. Soybean Oil future still hovering at high price of US67.

Share price chart

Share price is still on uptrend although volume is extremely low recently. With high CPO price and hopefully better sales volume in Q2, I am optimistic that Q2 result will be better than Q1.

The current PE is around 12.5 which is still on the low side and considered attractive compared to other plantation giants (other lower PE companies are CEPAT, ChinTek and SOP).
  

Interesting to note that between Nov 2020 to March 2021, substantially shareholders are reducing their stakes to comply with 25% public spread. 

At time of writing, I own HSplant shares and will continue to hold.