FIGURE 1: CEPATWAWASAN GROUP BHD LAST 2 YEARS SHARE PRICE TREND
**analysis based on 2018 annual report.
1. GENERAL INTRO: CEPATWAWASAN is one of the main oil palm plantations in Malaysia.
2. NOTABLE POINTS:
a. In 2018 report, main business segments include operation of oil palm plantations and milling operations as well as biomass and biogas power plants.
b. The Group operates oil palm estates in Sabah with a total planted area of 8,442 hectares and total annual fresh fruit bunches (FFB) production of 121,514 MT.
c. The group also operates 1 palm oil mill that has a capacity of 90 MT FFB per hour and produced 75,847 MT CPO in 2018. The reported average oil extraction rates (OER) is 19.51%.
d. The Group is also operating a 12 Megawatt Biomass power plant and a 4.0 Megawatt Biogas power plant, both in Sandakan, Sabah
e. In 2018, the Group recorded a decrease in earning per share from 7.82 to 1.72 sen per share compared to 2017, due to a decrease of FFB production, lower CPO selling prices and decrease sales from its biomass power plant.
3. IS THIS COUNTER A STRONG GROWTH STOCK?
a. REVENUE RANGE (RM million): 240.6 million as reported in 2018 annual report, this is a medium revenue company.
b. SHARE PRICE: from 2018-2020, share price has been decreasing from around RM0.80 to RM 0.50, then increasing quickly to around RM0.65 by January 2020
c. EARNING PER SHARE (EPS): earning per share in last 5 years fluctuated from 1.72 to 7.82 sen
d. FUTURE POTENTIAL/PROSPECTS: share price expect to be stable in the next few years
e. CAPITAL EXPENDITURE (CAPEX): spending on purchase of new fixed assets is RM 13.2 million, around 2% of total assets.
4. IS THIS A STRONG DIVIDEND STOCK?
a. DIVIDEND YIELD: in 2018 financial year, CEPATWAWASAN declared a dividend payout of 1.5 sen per share to shareholders, which amounts to a dividend yield of 2.31%.
b. CONSISTENCY: the dividend payout was consistent, dividend paid to shareholders in last five years (2014-2018) ranged from 1.5 to 2 sen per share.
c. DIVIDEND PAYOUT RATIO: in 2018 financial year, CEPATWAWASAN paid out 87% of its earnings to shareholders in the form of dividends.
5. IS THE MANAGEMENT PERFORMANCE GOOD?
a. RETURN ON EQUITY (ROE): in 2018 financial year, CEPATWAWASAN achieved a low return of shareholders’ equity, at 1.39%.
b. COST-TO-INCOME RATIO: cost-to-income ratio is very high, at 2603%, meaning that materials and operational costs are very high and profit is low.
6. OTHER INDICATORS:
a. CASH FLOW: cash flow is positive, around RM 14.8 million, equivalent to RM 0.05 per share
b. SUPPORT BY INSTITUTIONAL INVESTORS: this counter is not well supported by institutional investors, there are only 8 institutional investors at top 30 major shareholders list, not including insurance companies and investment funds. Its major shareholders is MHC Plantations Bhd (28.75%).
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