Tuesday, June 18, 2013


1st and foremost would like to thank MAYBANK for organising such an event to share us knowledge about their research.

The key drivers for Plantation counter

1. Prices of CPO 
-higher prices will benefit the producer as they have more margin from their production

2. Operating cost 
- lower cost to get higher margin

3. Production of FFB
- the more you produce the more u able to sell and make, but need to be aware of the CPO price also.

These 3 factors are the main drivers for the P&L of a plantation company

The analyst pointed out that, its not easy to get a cheap and undervalue plantation stock in malaysia as the CPO price had drop from the highest level but the Plantation index is still remain at high level.
This is due to those syariah fund(a big chunk of money in msia) can't really invest into non-syariah compliance counter, hence, telcos and plantation is where they invested heavily. As a result, plantation is well supported.

The analyst also told us that those company that has younger tree profile will tend to have higher cost as the extraction rate of palm oil is quite low.  On the other hand, he thinks that the demand for oil palm will grow and able to cater the grow in supply.

Stock pick

1. Genting Plantation (Top pick, TP10.10) (price today RM9.46)

- This counter has quite a lot of land at JOHOR which is around the Johor Premium Outlet. 
- They r the 2nd largest land owner in Johor after UEM Sunrise   
- They have a big piece of land around KLIA too.
- The grow rate of the plantation company is 10% which is quite high and can consider as a grow stock

2. TSH Plantation (price today RM2.40)
- This counter has lots of young tree
- Going to have more production soon as the palm tree mature
- Grow rate of this company is 18% 
- Will be strongly benefited if the CPO price continue to rise

3. Ta Ann (price today RM3.90)
-New venture into plantation but has some issue with their logging concession in Australia
- Might get compensation for some logging issue
- Lots of young tree, gonna have yield soon
- Very high risk counter, only for risk taker     

4. First Resources (SGX) (price today SGD1.855)
- Have good management

5. Bumitama  (SGX) (price today SGD1.01)
- A subsidiary of IOI
- He has a feeling that this is a duplication of IOI in the 1990's

The analyst do think that WILMAR (SGX) (price today SGD3.30) is also a good bet and the company will always buy back their shares at SGD3 which indicates that the company see good values at that price.

 p/s: To those who are interested to join Maybank Research talk, U may contact me through yzchoy@hotmail.com. The Research talk will held in Dataran Bangsar and the next talk will be determine soon. Pls do not hesitate to contact me for more information. Thanks!


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