Mar 2022 Performance

 

SHARES ADDED

• ATRIUM @ RM1.45
• WellCall @ RM1.20
• Pohuat @ RM1.40
• United Plantation @ RM15.00

PACKAGING

Both BPPLAS and ThongGuan had released their Q4 results. Stellar performance but share price does not appreciated much. ThongGuan on the other hand drop due to resin price concern as Crude Oil already more than USD100 per barrel. I am not too concern as both companies are financially stable and will be able to pass on the resin cost to customers.

 

FURNITURE

Generally flat across the board. I added Pohuat as the company has successfully back to profit again from both Malaysia and Vietnam operations. The company has annouced 2 cents dividen. It will take at least 2-3 quarters before the price move up again. Hence this is good time to add Pohuat shares.

PLANTATION

My best earning in first quarter 2022 is from plantation. I added United Plantation for its stable dividen income (more than 7%) which ex-date is in April. The CPO price is still very high @ RM6000 per tonne due to supply shortage and Ukrain-Russia war. There is still room for share price appreciation as average CPO price last year was around RM5,000 for most plantation companies.

OTHER

SamChem and CSC Steel perform well. CSC Steel has appreciated more than 20% which suprised me.

FAVCO and Kawan do not changed much. They will need some time to appreciate.

FINANCE

ELK-DESA and Takaful are still flat. RCE has appreciated a bit. The dividen for ELK-DESA and RCE will come soon.

United Plantation - Sustainable Dividen?

 

Company : United Plantation – Sustainable Dividen?

Business:

Well established mid-sized plantation company with estates in Malaysia (71%) and Indonesia (29%). In Malaysia the estates are located in Perak and Selangor. In Indonesia, they are located in central Kalimantan. 90% of the estates are oil palm and remaining 10% are coconut. They have palm oil mills for their own FFB processing and oil refinery.

 

 

Fundamental:

Company has huge cash pile of RM478 million. Strong cash flow and no problem of giving dividen!

 

Revenue spike in 2021 due to high CPO price. Profit margin is pretty stable at average of 25%.

Challenges:

• Shortage of labour which affect harvesting
• Fertilizer price hike

 

Lates Q4 result:

This company does not issue Q4 result. Instead, they published annual report straight away. A bit confusing but this show how efficient they are!

 

Prospect:

The Ukraine-Russia war has an immediate effect on CPO because Ukraine and Russia are major sunflower oil producers. As a result of war, Ukraine cannot do farming and this will take at least 1 year to recover.

CPO price usually go in tandem with Crude Oil price. Due to sanction on Russia, oil price will remain high. High crude oil price will force Indonesia to curb their CPO export due to domestic demand and benefit Malaysia exporters. Complicated huh?

  

• CPO price is record high. Even at RM5,000 per tonne. Company will make huge profit. Based on their report, their average selling price is only RM3,309 due to hedging.
• Company practise hedging and therefore the risk of sudden drop of CPO will not have immediate effect on the company.
• Technical know-how to drive production efficiency. See note from their annual report.

 

CPO YIELD IS HIGHER THAN PEERS

 

 

PEERS FFB & CPO YIELD

 

 

FORWARD SALES PRICE – HEDGING

Below note explains why their CPO selling price is lower than peers.

 

Very Interesting Fact of Palm Oil Vs Soy Bean Oil

 Dividen:

Dividen policy is 70-80% payout of its profit. This is very high compare other plantation company. In fact payout ratio for 2021 is a whopping 92%!!

 

Forecast Dividen for 2022 shall be at least 115 cent which is 7.6% based on current price of RM15.

 

 Technical Analysis on Chart:

 

At time of writing, I own UTDPLT shares. Buy at your own risk.

 

Dancomech - Benefit from high CPO and Crude Oil ?

 

 

Company : Dancomech – Benefits from High Crude Oil and CPO?

 Business:

Manufacture of pumps and trading of valves, pump, gauges and recorders in oleochemical, Oil & Gas, water and wastewater and HVAC industries. This is mainly for plants maintenance purpose.

The trading division contribute 70% of the group revenue which is mainly from Oil and Gas and Oleochemical. Company also diversified to metal stamping business by acquiring MTL company in 2020 that produce tools and die.

A small cap company. It has been chosen as Asia’s 200 best under a billion company but not sure this is relevant to their actual share performance.

 

Fundamental

Company is in net cash position with clear growth of revenue. However, the CAGR-PAT is very small and profit margin is single digit at 8%.

 

 

Past 5 years revenue record show a clear trend of growth. Profit margin is declining especially in 2021. Based on their annual report, revenue growth is because of acquired metal stamping business, electronic, electrical & instrumentation. Despite revenue almost double, the profit after tax increase is very small (RM0.3 million).  

 

  

Lates Q4 result:

Q4 revenue increase and profit margin slightly improved.

 

Prospect:

• Potential benefit from high CPO and crude oil price that allows plants to spend more on maintenance.
• Revenue contribution from Metal Stamping business, Material handling Solution and E&E division are yet to reflect fully in FY 2021.

 

 Dividen:

 

Dividen payout ratio is 35% of its profit.

 

Technical Analysis on Chart:

Share price on downward trend because of the Warrant is about to expire. Hence adding more mother shares to the market. It seems like high risk and high volatile company.

 I don’t have Dancomech shares but good to monitor their performance especially profit after tax in Q1.