Tuesday, April 24, 2012

Last Train ......

This will be the last time I post something on Jaya Tiasa until it goes to RM13.00 cum basis or RM4.50 on an ex-basis. Naturally Jaya Tiasa is on a 15 year high, and naturally investors are loathed to buy at current levels. So, you have to do your own research and decide. 

To me, this is the easiest, no-brainer, for an easy 50% within a short period of time. Possibly the best recommended stock in my 6 years of blogging.


You already have the convincing comparison to Rimbunan Sawit. Now, lets compare to another very attractive counter, IJM Plantations.

IJM Plantations is a 55%-owned subsidiary of IJM Corporation. The principal activities of the group are the cultivation of oil palm, investment holding and provision of management services to its subsidiaries. The group had planted area of 30,528 hectares, of which 77% was matured. It presently owns and operates 11 oil palm estates, complemented by four palm oil mills.
IJM Plantations' market cap is RM2.65bn. Jaya Tiasa's at RM2.7bn. Jaya Tiasa has 5 mills.

IJM Plant 3 most recent quarters saw net profit hitting RM150.4m. If we just add another RM55m for the last quarter = full year should be RM205.4m. Jaya Tiasa is slated to make RM240m in 2012. 
240/205.4 = 1.17
1.17 x 2.65  = RM3.09bn
RM3.09 / 2.7 = 1.14 x 9.56 = RM10.90
Jaya Tiasa has a base valuation at RM10.90.

 
If you look at the plantation hectarage, IJM Plant's 30,528ha compared to Jaya Tiasa's 61,000ha. If you use that, Jaya Tiasa's valuation should be doubled that of IJM Plant alone. Mind you, that is on hectarage of palm oil, not even counting the 700,000ha of timber concessions under Jaya Tiasa. Of course Jaya Tiasa's plants are a lot more youthful, but it only takes another 3-4 years to catch up.

So, 2.65 x 2 = RM5.3bn
RM5.3bn / 2.7 = 1.96 x 9.56 = RM18.70

The figure RM18.70 is just on palm oil alone. We did not calculate the timber concessions which is almost 10x the size of Singapore.

Naturally, you seem to have to hit people on their heads to see the gross under valuation. A share will re-rate on a gradual basis, not overnight. As mentioned before, the recently announced exercised is single most important catalyst that will bring up the valuation of Jaya Tiasa. With sufficient liquidity, comes proper valuation.

Then again, there are many friends who would suggest 5 other palm oil counters to me when I said Jaya Tiasa. You know, the TDMs, Kretams, etc ... They are all good, but none will have the upside of Jaya Tiasa.
 
For a sustained run in a small to mid-sized palm oil counter, you need:

a) Capital - for clearing, planting and also acquisition of more plantation land (who do you think wins this, with the 15% new share placement, Jaya Tiasa will be raising almost RM400m cash)

b) Land Acquisition Strategy - There should be a prolonged plantation land acquisition strategy. Again, which small-mid sized company you think has a huge leg up on the rest? Its the Tiong family we are talking about

c) Strategy To Be #1? - Most small mid sized counters are caged in that category as they do not have the "vision", leadership or ability to take the company to be the top 3 players in the industry. Knowing Tiong for how he does business, the deliberate way the family went about moving into palm oil, do you think they will stop at 70,000ha?
 
NOTE: The above opinion is not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees. I may already have positions in the above mentioned counter. The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.

12 comments:

solomon said...

Convinced with the picture and analysis.

See the last train at 17.

Kingsmen said...

could this be a hotel california?

Salvatore_Dali said...

solomon, see ya at 17

kingsmen ... very crytically funny, ... you can check out anytime you like but you can never leave...lol

Unknown said...

Pretty babe, i like it

Bonescythe said...

Got cica = got convinced
No cica = No convinced.

:D

Haha.. Very convinced! :D

AmLiange said...

dali!! is this how u do it! write about it just so u can unload? so predictable. When dali writes about the counter, TIME TO SELL!!!

WYS said...

Convincing write up but chartwise it does look like someone is unloading at the top. Would be shitty if i got myself in but can't get out with the illiquidity.

Salvatore_Dali said...

amliange,

no need to talk, just sell then...

wys,

buyers sellers ... I see only one possibility in that they may want to cap the px now to issue the 15% shares without it getting too high


Pls refrain from commenting, pls comment in 2 months time when it goes X, ... then if still not making money ... then can bomb me

bennu chong said...

thanks for this wonderful piece of analysis bro..keep it up... don bother those who cant seems to appreciate it

WYS said...

Thanks for the reply. i hope you'll be right in 2 months time.

AmLiange said...

bennu chong, i hope u r still as convinced. Price dropping 10+sen everyday since dali wrote about it.

If this is the "last train", its last chance to lose your pants! Dali thanks for bring this stock to our attention, great stuff after looking into the annual report. Compared to Felda, Jtiasa clear winner. But everyone's focus now is on Felda! I m sure you're preparing for Felda as well, hence liquidating Jtiasa first and buying Felda. Made your round with Felda, coming back to Jtiasa. Very well thought out Dali, very savvy move. But pls dont manipulate and abuse ur readers! If i bought when u blogged it and sell now, imagine my loss.

AmLiange said...

u seem to have excuses, sorry answers, to all the eventualities. Goes up, hail dali. Goes down, Dali quote "I see only one possibility in that they may want to cap the px now to issue the 15% shares without it getting too high". Wat nonsense!!!

Isnt the higher the price the more money they can get from the placement shares!!!

If management is convinced the counter is undervalued, why would they wanna short change themselves at the expense of minorities!! Bear in mind they are also short changing themselves since they are the biggest shareholders.

Dali next time make better excuse, sorry answer, for your vulnerable and thinking readers.