TDM vs. Glenealy Plantations

The author published the analysis report here is for his own reference only. It is not an indication of the author's business interests for companies being analyzed. It is definitely not an investment advice, please see the full disclaimer located at the bottom of the blog post.

TDM Berhad's (hereafter called "TDM") principal activities including management of oil palm plantation, processing and trading of palm oil and related products, also provision of consultancy and management services to specialist medical centres and owner of specialist medical centres. Glenealy Plantations (Malaya) Berhad's (hereafter called "GNEALY") principal activities including operation of oil palm plantations, oil mills and quarries.

Side-by-side Comparison

Capitalization
Measure by size, both companies are similar, TDM is slightly bigger than GNEALY, 77 millions approximately.

Income Items
Important items under this section is per share earnings and dividend, GNEALY is the all-time winner for per share earning, but TDM pay higher dividend.

Balance Sheet Items
Both companies have solid balance sheet, Cash or cash equivalents is more than enough cover the Current liabilities. Current assets is more than enough cover the Total liabilities. GNEALY is stronger financially as it's Cash or cash equivalents is more than enough cover the Total liabilities.

Ratios
Price-wise, TDM is more attractive at the moment given it sell at lower multiple of earnings currently and historically and much higher current dividend yield. TDM achieved higher return on book value, but with lower profit margin. TDM has much better earning growth rate compared to GNEALY, 381.9% and 103.6%.

GNEALY advantages are higher profit margin and much stronger balance sheet as shown by Net income/sales and Current assets/current liabilities. A question come to mind is ... Is the overwhelming availability of current assets of the company showing the incompetency of management in capital allocation? At the same time, the current dividend payout is less than 25% of earning and yielding much lower return compared to TDM.

Price Record
TDM has much higher growth rate in both the long-term and near-term price record, the growth of price is reflected the growth of earnings.

Financial Summary

TDM's Financial Summary

By looking into detail of the financial summary of TDM, it show an amazing historical growth records, more than 50% in operating income, net income, earning per share, dividend per share with an exception in financial year 2009. It achieved this great result with reduction in total liabilities every year in the past 5 years except financial year 2010. Both return on average equity and assets are moderate, but it perform better in the past 3 years. Every year the company have lower and lower utilization of financial leverages shown by D/E ratio. I particularly like the low operating overhead attribute of the company (5 years average 4.54%) shown by narrow margin of Operating Income/Sales and Net Income/Sales.

GNEALY's Financial Summary

GNEALY has great historical growth record too (more than 20% in operating income, net income, earning per share), but less appealing compared to TDM. Historically, GNEALY is more conservative financially compare to TDM, as it utilized minimal financial leverages (D/E ratio is less than 30%) compared to TDM. But this advantage is disappear compare to recent record of TDM as it achieved D/E ratio 28.5%. Also, the company have much higher operating overhead, 5 years averaging 14.59%, 10% higher than TDM.

As conclusion, the ultimate winner of this comparison is TDM.

How Much TDM Worth?
Given the company CAGR of EPS is 20% (approximately 56.1% in the past 5 years) and Dividend Per Share is 15% in the next 10 years, the EPS of the company will be RM$0.635 in 2020 (included adjustment of 2 bad years in 10 which reduce 50% of group's net profit) and the forecast dividends received over the 10 years period totaling RM$1.30 (included adjustment of 2 bad years).

If the stock price of TDM sell at 10 times earning in 2021, it is RM$6.35 and included total dividends received, it is RM$7.65 per share. Given annual 6% inflation rate in next 10 years, the discounted rate is 0.591898. So, RM$7.65 discounted to today price, it is RM$4.52 per share.

The discounted price is 31.1% higher comparing to today (25 November 2011) closing price at RM$3.45. The stock is a great bargain! What do you think?

I'd love to hear comments from you!

BLD Plantation vs. Kwantas Corporation

The author published the analysis report here is for his own reference only. It is not an indication of the author's business interests for companies being analyzed. It is definitely not an investment advice, please see the full disclaimer located at the bottom of the blog post.

BLD Plantation Berhad's (hereafter called "BLDPLNT") principal activities including operation of a palm oil refinery and kernel crushing plant, cultivation of oil palm, processing of fresh fruit bunches and sales of related products. Kwantas Corporation Berhad's (hereafter called "KWANTAS") principal activities including operation of oil palm plantations, palm oil mills, kernel crushing plant, palm oil refinery plant, shortening plants, oleochemical plants, biomass power plant, bulking installation and trading of palm oils and fats products.

Side-by-side Comparison

Capitalization
Measure by size, both companies are similar, KWANTAS is slightly bigger than BLDPLNT, 43 millions approximately.

Income Items
Important items under this section is per share earnings and dividend, BLDPLNT is the all-time winner.

Balance Sheet Items
BLDPLNT has much stronger and healthier balance sheet compared to KWANTAS.

Ratios
On the first glance, KWANTAS is more attractive by looking at Price/earnings ratio, given 5.41 times earning. But it is not the case when look into the following items:

1. Price/earnings, 2009-2011: BLDPLNT has more appropriate valuation compared to KWANTAS, 11.42 times earning and 38.6 times earning.
   
2. Current assets/current liabilities: BLDPLNT has adequate level of working capital, where KWANTAS was at alarming level, short of 30%.
   
3. Earning growth per shares: Both near-term and long-term of earning growth of KWANTAS is negative.
   

Price Record
The current price level of BLDPLNT reaching it record level since it listed in 2003, where KWANTAS at the low end of it's historical price level.

As conclusion, the winner of this comparison is BLDPLNT.

Financial Summary

BLDPLNT's Financial Summary

By looking into detail of the financial summary of BLDPLNT, it show a amazing historical growth records with one exception in financial year 2009.

The recent return on average equity (hereafter called "ROAE") is in appropriate level, but return on average asset (hereafter called "ROAA") and profit margin is in single digit. I think this is due to the company involved in trading business.

How Much BLDPLNT Worth?
Given the company CAGR of EPS is 20% (approximately 37.4% in the past 5 years) and Dividend Per Share is 10% in the next 10 years, the EPS of the company will be RM$1.104 in 2020 (included adjustment of 2 bad years in 10 which reduce 50% of group's net profit) and the forecast dividends received over the 10 years period totaling RM$0.98 (included adjustment of 2 bad years).

If the stock price of BLDPLNT sell at 10 times earning in 2021, it is RM$11.04 and included total dividends received, it is RM$12.02 per share. Given annual 6% inflation rate in next 10 years, the discounted rate is 0.591898. So, RM$12.02 discounted to today price, it is RM$7.11 per share.

The discounted price is merely 4.14% higher comparing to today (24 November 2011) closing price RM$6.83. I don't think the stock is undervalued, what do you think?

I'd love to hear your comments!

Kumpulan Fima vs. Fima Corporation

The author published the analysis report here is for his own reference only. It is not an indication of the author's business interests for companies being analyzed. It is definitely not an investment advice, please see the full disclaimer located at the bottom of the blog post.

Kumpulan Fima Berhad's (hereafter called "KFIMA") principal activities including production and trading of security and confidential documents, oil palm cultivation including oil palm production and processing, bulk handling and storage of various types of liquid and semi-liquid products and manufacture and distribution of canned fish. Fima Corporation Berhad's (hereafter called "FIMACOR") principal activities including production and trading of security and confidential documents and oil palm cultivation including oil palm production and processing. KFIMA is control entity of FIMACOR, 61.92% shareholdings at financial ended 31 March 2011.

Side-by-side Comparison

 

Capitalization
Measure by size, both companies are similar, FIMACOR slightly bigger than KFIMA, 43 millions approximately.

Income Items
Important items under this section is per share earnings and dividend, FIMACOR is the all-time winner.

Balance Sheet Items
Both companies have a strong balance sheet and are cash-rich company as Cash or cash equivalents is more than enough to pay off all liabilities of the company.

Ratios
Given market price on 31 March 2011, both companies has similar level of valuation, following items catch my eye ball:

1. Net income/sales: FIMACOR has larger profit margin than KFIMA, 10% extra. 
2. Earnings/book value per share: FIMACOR has better rate of return compared with KFIMA, 5% extra. 
3. Total liabilities/book value: More importantly, FIMACOR achieved the results above with lower gearing than KFIMA. 

Also, FIMACOR has better earning growth prospect than KFIMA in both near-term and long-term.

Price Record
FIMACOR has better long-term (2001-2011) price growth rate compared to KFIMA, but the near-term (2010-2011) price growth rate of both companies are similar.

Financial Summary

KFIMA's Financial Summary

FIMACOR's Financial Summary

By looking into detail of the financial summary of both companies, FIMACOR winning all measurements except dividend growth rate.

The 23.38% compounded annual growth rate (hereafter called "CAGR") of total liabilities of FIMACOR catch my attention, it was caused by acquisition happened on 2008 which doubling the total liabilities. This is not an issue as cash on hand of FIMACOR is more than enough to fully cover all liabilities.

As conclusion, the ultimate winner of this comparison is FIMACOR.

How Much FIMACOR Worth?
Given the company CAGR of EPS is 15% (approximately 30.23% in the past 5 years) and Dividend Per Share is 10% in the next 10 years, the EPS of the company will be RM$1.958 in 2020 (included adjustment of 2 bad years in 10 which reduce 30% of group's net profit) and the forecast dividends received over the 10 years period totaling RM$1.67 (included adjustment of 2 bad years).

If the stock price of FIMACOR sell at 10 times earning in 2021, it is RM$19.58 and included total dividends received, it is RM$21.25 per share. Given annual 6% inflation rate in next 10 years, the discounted rate is 0.591898. So, RM$21.25 discounted to today price, it is RM$12.58 per share.

The discounted price is 119.5% higher comparing to today (22 November 2011) closing price RM$5.73! The stock is in great margin of bargain! What do you think?

QL Resources vs. Lay Hong

The author published the analysis report here is for his own reference only. It is not an indication of the author's business interests for companies being analyzed. It is definitely not an investment advice, please see the full disclaimer located at the bottom of the blog post.

In this analysis, two agricultural based companies: QL Resources Berhad (hereafter called "QL") and Lay Hong Berhad (hereafter called "LAYHONG") put side-by-side for comparison. QL and LAYHONG was not a direct competitor as QL's principal activities including marine product manufacturing, integrated livestock farming and crude palm oil milling, where LAYHONG's principal activity is integrated livestock farming only. Also, QL is substantial shareholder of LAYHONG, 23.91% shareholdings at financial ended 31 March 2011.

Side-by-side Comparison

Capitalization
Measure by size, QL is about 30 times larger than LAYHONG.

Income Items
Important items under this section is per share earnings and dividend, LAYHONG is the all-time winner except Avg. Earned per share 2005-2007.

Balance Sheet Items
QL has stronger balance sheet, albeit LAYHONG book value per share was 2.77 over QL's 0.95.

Ratios
Given market price on 31 March 2011, LAYHONG has much lower valuation than QL, what make QL has such high valuation?

1. QL has better earning power than LAYHONG, as illustrated by Net income/sales: 7.01% over 3.49% and Earnings/book value per share 15.75% over 10.64%.
2. QL has more appropriate and lower gearing (using less financial leverages) than LAYHONG, as illustrated by Total liabilities/book value, 0.85 over 1.33 and Current assets/current liabilities 1.47 over 0.96.

However, LAYHONG has much better earning growth prospect than QL, 1264.1% over 465.26%. A question come to mind is: Is the earning growth of LAYHONG sustainable? I will discuss this aspect under Financial Summary section below.

Price Record
The long-term (2001-2011) price different of QL is about 10 times and LAYHONG is about 5 times, QL has better price growth prospect in long-term. The near-term (2010-2011) price different of QL is about 2 times and LAYHONG is about 3 times, LAYHONG has better price growth prospect and expect higher price volatility in near-term.

Financial Summary

QL's Financial Summary

LAYHONG's Financial Summary

By looking into detail of the financial summary of both companies, you should understood why investment community giving QL such a high valuation: It demonstrated consistence earning power and average return on equity around 20%.

It is right that LAYHONG has much better return in the past three years, but I have no clue about LAYHONG's ability to maintain it's grow momentum as it's business was sensitive to grain price such as corn and soya. A hike in price of grain will eat up LAYHONG's 3.5% profit margin.

Please take note that QL increase it's weighted average shares year on year, but the increment mostly via share-split and bonus issue where increment of weighted average shares of LAYHONG via private placement and options exercised of Executive Share Options Scheme (ESOS).

As conclusion, the ultimate winner of this comparison is QL.

How Much QL Worth?
Given the company CAGR of EPS is 15% (approximately 18.46% in the past 5 years) and Dividend Per Share is 12% in the next 10 years, the EPS of the company will be RM$0.317 in 2020 (included adjustment of 2 bad years in 10 which reduce 30% of group's net profit) and the forecast dividends received over the 10 years period totaling RM$0.52 (included adjustment of 2 bad years).

If the stock price of QL sell at 15 times earning in 2021, it is RM$4.76 and included total dividends received, it is RM$5.28 per share. Given annual 6% inflation rate in next 10 years, the discounted rate is 0.591898. So, RM$5.28 discounted to today price, it is RM$3.13 per share.

The discounted price is merely 6.28% higher comparing to today (18 November 2011) closing price RM$2.93. I don't think the stock is undervalued at the moment, what do you think?