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Valuation of plantation stocks - ranking from lowest PER to highest PER 

Stock  Market Cap RM mil Net profit Trailing PER DPS sen Dividend yield (%)

SWKPLNT

633

61

10.4

10

4.4

TAANN

1,352

82.5

16.4

10

3.3

CHINTEK

637

36

17.7

11

1.6

TSH

1,534

79.1

19.4

1.5

1.4

IJMPLNT

1,647

71.3

23.1

2

1.1

KLK

24,993 

962.8

26

50

2.2

SIMEPLT

33,528

1,185

28.3

9.44

1.9

IOICORP

26,586

872

30.5

8

1.9

GENP

8,247

254.4

32.5

17

1.8

BPLANT*

1,344

-157

-

0.5

0.8

* Other lossmaking plantation stocks are FGV, UMCCA, JTIASA, TDM and RSAWIT

 

 

Most undervalued plantation stocks by PER

1. SWKPLNT at  10.4x

2. TAANN  at  16.4x

3. CHINTEK at 17.7x

 

 

Most undervalued by dividend yield

1. SWKPLNT at  4.4%

2. TAANN at  3.3%

3. KLK at  2.2%

 

 

 

Windfall profits for plantation stocks

Plantation companies are very likely to make windfall profits in first 6 months of 2021.

 

Monthly average CPO prices are ~RM3,800 per tonne in Jan-Feb. Prices in Mar is now >RM4,000 per tonne. 

 

Safe to say CPO prices will average >RM3,800 in 1Q21, 41% more than the average RM2,700 per tonne in 1Q20.

 

  CPO@RM2,700    CPO@RM3,800 Change %
Sales   2,700      3,800     +41%
Operating cost   2,000      2,000  
Operating profit      700      1,800    +157% (3.8x sales growth)

 

For example, a plantation company will see operating profit increase 157% at average CPO prices of RM3,800 per tonne, assuming all-in operating cost of RM2,000 per tonne. Operating profit increase 3.8x sales growth because all the increase in CPO prices flow directly to the bottomline.

 

Monthly average CPO prices are ~RM2,300 per tonne in 2Q2020. As long as CPO prices remain above RM3,000 per tonne, plantation stocks will continue to make windfall profits. 

 
 
 

Monthly average CPO prices

http://mpoc.org.my/monthly-palm-oil-trade-statistics-2021/

 

 

 

Disclaimer

All information provided here should be treated for informational purposes only. This is NOT a buy or sell recommendation. Do your own research or consult your investment advisor before you invest. It is solely reflecting author's personal views and the author should not be held liable for any actions taken in reliance on information contained herein.

 

https://klse.i3investor.com/blogs/Momentum/2021-03-14-story-h1542179808-The_most_undervalued_plantation_stocks_ranking_by_PER_and_windfall_prof.jsp

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