INNOPRISE - Can We Still Invest?

Fundamental :

Company has no bank borrowing as at 31^st December 2020. They have adopted a dividen policy of distributing 80% of the profit after tax. Revenue is cyclic as palm oil is commodity.

 

Q1 Result

 

Two major factors are CPO price and Production. I take the conservative 80% production output from the average of 2020 & 2021. Based on this production rate, let’s see how the CPO price will affect the earning per share and the dividen yield.

The EPS is generated using the formula that developed. It is not 100% but give very good indication.

 

 

 

CPO on Downtrend

 

 

The CPO down trend will continue as Indonesia cutting the export duty and putting more CPO supply to the market. Coming good harvest of Soybean in Latin America will also help to ease the supply shortage. Hence, I estimate that CPO will probably drop in between 3000-4000 level.

Based on this CPO level and dividen yield return, the price to enter is around RM1.36-RM1.50.

 

Stock Price on Down trend

 

Price already drops below the support level and will continue to drop. The bearish continue trend has shown.

 

At time of writing, I own some INNOPRISE shares @ low price. Waiting for opportunity to buy more.

 

FAVCO - Lesson Learn

FAVCO announced a whopping 85 cents per share on 6 May 2022. Price shot up to RM3.25 immediately.

Many investors trapped or lose money when buying at high sides @ RM3.25. Here is my view on what we can learn from the this incident. The selling time is important to avoid being trapped.

Motive of Huge Dividen

The motive of such high dividen was very clear. Muhibbah is the biggest shareholder of FAVCO and they are in cash flow problem. FAVCO has huge cash file. So naturally Muhibbah would want to utilize the cash pile from FAVCO. So the huge dividen is to save Muhibbah and not for rewarding shareholders because of good business.

In some cases, huge dividen also can happen if the company sold their core business. For example : SCGM who sold their plastic business to Mitsui Japan. 

Share Price

Share price will naturally adjust after ex-date. A lot people do not aware of such incident.  Share price also under huge selling pressure after ex-date. In many cases, prices go down FAR MORE THAN DIVIDEN itself. Unless your entry price is supper low or the company businsess will continue to be good, there is not point of holding the shares.

Strategy 

I have FAVCO share before the announcement of huge dividen which I could make appox 30% profit. However, I made a mistake of not selling it as I thought it had not reached the profit that I wanted. I also anticipated that business will continue to be good as oil price has recovered to USD100 per barrel. However, the QR was a disappointment. I ended up selling after dividen ex-date and made only small profit overall.

So the lesson is to sell before ex-date or sell half the shares if you anticipated good result or business will be good.