INNOPRISE - Is there a hope in plantation?

 

Company : INNOPRISE PLANTATIONS BERHARD

Business :

Oil palm cultivation and fresh fruit bunch processing with planation sites in Sabah. Yayasan Sabah is the largest shareholder (50.22%) and TSH plantation is the second largest. One of the smallest plantation companies among the listed plantation company with revenue just over RM150 millions.

 

It is good that company is MSPO certified as ESG is hot an issue now for plantation.

 

Fundamental :

Company has no bank borrowing as at 31^st December 2020. TSH is the second largest shareholder and will be able to contribute their plantation expertise to the company. The company has adopted a dividen policy of distributing 80% of the profit after tax starting begining August 2020. This is good news to shareholders. Revenue is cyclic as palm oil is commodity see their 5 years revenue chart below.

 

5 years revenue

Year	Revenue (million)	PBT (Million)	Mature area (Ha)
2020	154.936	46.261	11,505
2019	118.600	18.308	11,260
2018	114.220	12.485	11,074
2017	138.211	55.451	10,761
2016	136.349	41.387	9,542
2015	115.043	26.763	8,080

 

 Q1 Result

 

Profit and revenue are back on track again. Hopefully can maintain consistency for whole 2021 FY. Profit margin is healthy at 20-30% range.

 

Prospect:

Organic growth opportunity as mature area is slowing increasing every year. The yield will increase as 17% of young mature trees are coming to prime mature. The forecast of yield increase is about 3%. No further replanting is required and hence no additional cost.

 

Trees	Age	Percentage	Yield
Immature	1-3 years	6%	Low or no
Young mature	4-7 years	17%	medium
Prime mature	>8 years	77%	High

 

 

 

 

 

 Fresh Fruit Bunch production:

Month	Production (Metric Tonnes)	Production (Metric Tonnes)
July 21	20,994.54
June 21	22,719.79	57,500.41
May 21	17,565.83
April 21	17,214.59
March 21	16,714.79	47,458.27
Feb 21	15,018.30
Jan 21	15,725.18

 

Coming quarter no. 2 result will be good as price and FFB production are on the rise. The Q2 FFB production has increased by 20% based the table above. Theoretically the earning per share should increase by 20%  and not forgeting the high CPO price.

My view on share price:  

Price peak at RM1.30 and dropped drastically (seems like speculation activity?)

Price will trend higher in near term as it tries to break 200 moving average but also high risk of speculation. If entered around RM1.00 then should be safe.  

 

Dividen:

Dividen should be good and expected to be paid quarterly. See below statement from their annual report.

 

Forecast earning & PE.

In terms of earning, the forecast EPS is 8.48 and fair value price should RM1.11 with current PE of 13.18 (9 Aug 2021). Dividen yield should be 6% based on 80% distribution rate.

 

Q1	Q2	Q3	Q4	Total
1.88	2.2	2.2	2.2	8.48

 

At time of writing, I own some INNOPRISE shares. This is also another share counter owned by Cold Eye (Top 10).