Goh's comments are informative . She has mentioned some valid points to support her view from another perspective. I have learned something new. Thanks.

Engage some private investigators should be sufficient to reveal the facts.

cpng.

Possible of earning peanut interest:
1. Keeping all cash in the office, outlets or factory.
2. Majority of the Debtors pay before ending of each quarter. It seems not reasonable after comparing with turnover.
3. Transfer cash outside company to do Ah Long business and bring back cash before ending of each quarter .
4. Cash balance is fabricated.

sense maker. i am fully agree. You seem know well.

All these high profile irregularities are involved by a team of experts from various profession with extensive knowledge and experience in an industry. It's not a normal accountant can do it alone. The team knows where the loophole. How to cover this and that....

You must be kidding for claiming everyone can do a creative without the detection from the auditor. Experience auditors are not easy to fool man. If an auditor has sufficient knowledge or experience in an industry, you can't bluff him easily. They are not so gullible.

It's not difficult to fool the underwriter or auditors by incorporating some reasonable creative elements in the system. Everything can be nicely prepared and tally each other. What can an external auditor do if they have obtained relevant evidences from the company and the audit job is done as stated in their SOP? Keep their mouth shut is the only way. In addition, the role of the external auditor is NOT detecting fraud.

You are a super investor because you know the tricks to make money from the stock market. It is similar to a businessmen in China, they know tricks and dare to execute it.

With such a huge amount of cash in bank, how the management can justify the interest received is reasonable.

Sarawak Plantation facts:

Number of shares: 279,574,000
PER: 42
DY: 3.4%
Planted costs/ hectare: RM 8,700

Plantation area (hectares):
Mature area: 26,501
Immature area: 3,218 ( 11% )
Unplanted area: 11,059
Old Mature: 6,189 ( 23% )
Prime Mature: 12,654 ( 48% )
Young mature: 7,658 ( 29% )


3rd Quarter 2013 financial results:
Turnover: 104 million
Profit before tax: 20 million
EPS: 5.65 cents
Net Cash: 34 million

FFB production:
4th Quarter 2013: 115,360 ton ( increased by 37% )
3rd Quarter 2013: 84,316 ton

2 weeks to go before the quarterly announcement.

I am very confident to the bank in Malaysia. We hardly heard of any fake bank confirmation.

It did happen many times in China

ie:
Longtop was a $2.4 billion NYSE-listed company, until its auditor resigned following discovery of fraud as a
result of comparing company cash balance confirmations obtained from the main headquarters of the bank(s) with the confirmations previously provided by local bank branches. The confirmations provided by the local banks were all phony. According to Deloitte, Longtop’s
chairman, Jia Xiao Gong, told a Deloitte partner that there was “fake cash recorded on the books” because there had been “fake revenue in the past.” Just two weeks prior to the resignation
of the company’s auditor and the revelation of management fraud, a Morgan Stanley analyst recommended Longtop’s stock.

I can hardly believe the financial results reported by China businessman. It's simply too easy to fabricate the figures in China. Buying high PER stock like Jtiasa is less risky than Xingquan.

You can goreng it with a small capital since not many sellers.

leon 7. I was quietly collecting Asiapac during the correction period. Now, m waiting the quarterly announcement in 2 weeks.

Tommylim. You have promoted Asiapac too much. I can't buy more at cheap cheap price. Just managed to grab some at price.0.20.

INNO plantation unit is located in Sabah. This counter is really illiquid.

yeah. It would go higher. Just discovered something new. It's neither TAAN or Jtiasa. You would be surprised after making an evaluation of Sarawak Plantation.

If majority of investors follow your way of valuation, the share price would definitely shot up higher. I am more conservative on making a valuation.

Mr Koon, I did learn a lot from your article on how to become a super investor. In order to be more successful in investing, I have to think from the business perspective with the help of margin financing to increase my returns.

Ckliew.

I would not buy at 1.67. The upside potential is not justified given its current level of planted area. Of course, if CPO price climb higher, almost all share price of plantation companies would follow suit.

Normally, the management would reserve funds to acquire assets for future business growth. It is unlikely for them to distribute 50% profit as dividend. 30% is good enough. Many companies prefer to pay more dividend gradually to show the solid future prospects.

I don't really know how the business run in Jtiasa. By looking at the past 12 months performance and planted costs/hectare, I would say Jtiasa's business has not been run effectively by the existing management team.

Okdoke
I would focus on the data below for making a comparison.

Business operation
1. Land bank ( evaluate the long term growth potential given available land resources )
2. Planted area. ( evaluate mid term growth )
3. Mature / immature area ( evaluate mid term growth )
4. FFB production / hectare ( evaluate short / mid term growth )
5. OER ( evaluate business operation efficiency )

Financial
1. PE
2. Gearing ( evaluate borrowing ability to fund mid term or long term growth )
3. Planted costs / hectare ( evaluate business operation efficiency )
4. Current financial performance

The potential CPO to be generated from the future fully mature area is about 54,600 ton ( 13,000 hectares x 21MT/hectare x 20% OER ). With every RM 100 of CPO price, INNO would generate additional 5.46 million or EPS 2.9 cents. To earn profit after tax 30 million, it needs to enjoy a margin of CPO about RM 720/ton.

The share price is much depend on the CPO prices movement unless INNO has fully planted 22,700 hectares of land. The dividend yield is normally 1 to 3%.

Currently, Delloyd's palm oil segment earned profit 4 million in the last quarter. The planted area is almost similar size for INNO & Delloyd.

INNO should not have any problem to achieve 30 million profit after 3 years provided CPO is at least maintained at this level. Net profit of 30 million is equivalent to 15.8 cents / share. It's not possible to distribute 100% profit as dividend at the net profit level of 30 million.

Net profit of 40 million is equivalent to 21.2 cents / share.

You are very optimistic.
INNO is currently building a palm oil mill to be completed in year 2014. The mill costs about RM 47 million as stated in latest quarterly report under Capital Commitment. Existing borrowing is 21 million. Don't expect high dividend in next 3 years.

Need to beg the seller. You can only get 5 lots at the price 1.67.

What is the longer future development for Jtiasa & TAAN?

Jtiasa owns 7,326 hectares of vacant plantable land and will be fully planted its 70,900 hectare of land in 2 years.

TAAN owns 97,855 hectares of land bank. It acquired 30,989 hectares of vacant land in year 2012. Plantable is of course more than 70,900 hectares. TAAN has the potential to double its planted area till 70,900 hectares in the next few years.

Further more, the costs of planting RM/hectare for TAAN is much lower. It costs about RM 9,000 to plant an hectare of oil palm land. To achieve 70,900 hectares of planted land, TAAN may have to spend additional RM 320 million ( 35,555 hectares x RM 9,000/hactare ) only. The total plantation expenditure would be RM 639 million.

What about JTiasa? It may spend another RM 157 million ( 7,326 hectares x RM 21,500/hectare ) to plant the remaining 7,326 hectares land. The total plantation expenditure would be RM 1.525 billion.

What a huge difference for planting the same size of land of two companies. It may costs RM 639 million to TAAN but RM 1.525 billion to Jtiasa.

TAAN
Weight average number of shares: 370,537,000 ( 38.3% of Jaya Tiasa )

Information as at 31 Dec 2012
Land bank: 97,855 hectare
Planted area : 35,345 hectare ( 55.6% of Jaya Tiasa )
Mature area: 26,161 hectare ( 47.2% of Jaya Tiasa )

Some may have a perception that Jtiasa is better than TAAN because Jtiasa would yield high FFB production given its large planted land. If you look into more detail analysis, you would see the difference.

Let say, price of CPO up by RM 100. Both Jtiasa and TAAN would enjoy higher profit from the price increase. But the number of ordinary shares of TAAN is lower than 61.7% comparing with Jtiasa. To achieve the equal EPS of both companies for the contribution from palm oil segment , Jtiasa would have to produce 61.7% higher of FFB.

Currently, the FFB production of Jtiasa is 38% higher than TAAN. Base on the existing planted area ( 55.6% of Jtiasa) of TAAN , It's unlikely Jtiasa would produce 61% more FFB than TAAN in the end.

Is It Jtiasa better than TAAN?

High FFB production doesn't automatically translate into higher profit.

JTiasa's plantation division was managed to produce high FFB of 708,859 tons for the past 12 months but it suffered a loss.

Look at TAAN, with FFB production of 531,744 tons for the past 12 months, it was able to deliver a profit of 61 million.

The latest financial results of both companies shows a profit. Jtiasa's plantation unit was delivered a minimal profit but its FFB production 38% higher comparing with TAAN. It seems something not right.


JTiasa
Quarter ended 30 Sep 2013 ( Palm oil segment )
FFB production - 234,052 tonnage
Turnover : RM 77,761,000
Profit : RM 9,577,000

Palm oil segment ( past 12 months )
FFB production: 708,859 tonnage
Turnover - 251,806,000
Loss before tax - ( 12,247,000 )


TAAN
Quarter ended 30 Sep 13 ( Palm oil segment )
FFB production - 169,326 tonnage
Turnover - 88,495,000
Profit before tax - 29,582,000

Palm oil segment ( past 12 months )
FFB production - 531,744 tonnage
Turnover - 274,257,000
Profit before tax - 61,497,000

Finally, Asiapac is back heading north. Go! Go! Go!

Icon8888, your statement: " could it be because JT has bigger planted area (and as a result, more immatured palms) than TA, hence need to incur higher operating cost (fertiliser , etc) ? "

If you look at the accounting policy of Biological Assets, it seems that the all operating costs (fertilizer & etc) for Immature palm is capitalized as Biological Assets. Back to question again. Why Jtiasa make so less profit? Is it due to inefficiency of its operation?

" Plantation expenditure incurred on land clearing, upkeep of immature oil palms, administrative expenses and interest incurred during the pre-cropping period are capitalised under biological assets and are not amortised.

Upon maturity, all subsequent maintenance expenditure is charged to the statement of comprehensive income.
Replanting expenditure incurred on similar crops on formerly developed areas is chargeable to the profit or
loss in the financial year in which it is incurred. "

M waiting Keck Seng to drop below 6.00 and come back again.

Don't under estimate the magic of El Niño. It is very powerful

WMO El Niño/La Niña Update

30 January 2014
Download pdf versions: English Français Español

Current Situation and Outlook

The tropical Pacific continues to be ENSO-neutral (neither El Niño nor La Niña). Model forecasts and expert opinion suggest that neutral conditions are likely to continue into the second quarter of 2014. Current model outlooks further suggest an enhanced possibility of the development of a weak El Niño around the middle of 2014, with approximately equal chances for neutral or weak El Niño. However, models tend to have reduced skill when forecasting through the March-May period. National Meteorological and Hydrological Services and other agencies will continue to monitor the conditions over the Pacific and assess the most likely state of the climate through the first half of 2014.

Since the second quarter of 2012 El Niño-Southern Oscillation (ENSO) indicators in the tropical Pacific (e.g., tropical Pacific sea surface temperatures, sea level pressure, cloudiness and trade winds) have generally been at neutral levels, indicating that neither El Niño nor La Niña conditions have been present.

The latest outlooks from climate models and expert opinion suggest that oceanic conditions and atmospheric anomalies associated with El Niño or La Niña are most likely to remain neutral into the second quarter of 2014, with virtually all models maintaining average conditions. However, by around the middle of 2014, model forecasts generally indicate the chance of El Niño increasing to a similar level as that for ENSO-neutral. For the June to August period, nearly one-half of the models surveyed predict a weak El Niño situation to develop, while the other one-half predict a continuation of neutral conditions. It must be noted that model outlooks that span March-May period tend to have particularly lower skill than those made at other times of year. Hence some caution should be exercised when using long range outlooks made at this time for the middle of the year and beyond. Of the one or two models that predict the development of La Niña, such conditions are reached only briefly during the next couple of months.

Overall, while there is a very slight chance for La Niña development in the next one to two months, ENSO-neutral is considered the most likely scenario into to the April to June period, followed by roughly equal chances for neutral or weak El Niño during the third quarter of 2014.

It is important to note that El Niño and La Niña are not the only factors that drive global climate patterns. At the regional level, seasonal outlooks need to assess the relative impacts of both the El Niño/La Niña state and other locally relevant climate drivers. For example, the state of the Indian Ocean Dipole, or the Tropical Atlantic SST Dipole, may impact the climate in the adjacent land areas. Locally applicable information is available via regional/national seasonal climate outlooks, such as those produced by WMO Regional Climate Centres (RCCs), Regional Climate Outlook Forums (RCOFs) and National Meteorological and Hydrological Services (NMHSs).

In summary:

ENSO conditions are currently neutral (neither El Niño nor La Niña);
As of mid-January 2014, except for a small possibility for weak and brief La Niña development during the next couple of months, outlooks indicate likely continuation of neutral conditions into the second quarter of 2014;
Current forecasts indicate approximately equal chances for neutral conditions or the development of a weak El Niño during the third quarter of 2014, reflecting increased chances for development of a weak El Niño.
The situation in the tropical Pacific and Indian Ocean will continue to be carefully monitored. More detailed interpretations of regional climate fluctuations will be generated routinely by the climate forecasting community over the coming months and will be made available through the National Meteorological and Hydrological Services. For web links of the National Meteorological Hydrological Services, please visit:

http://www.wmo.int/pages/members/members_en.html

Dividend would be the bonus. I don't hope any within 2 years. Hope it would deliver better than expected quarterly results after 3 weeks.

Iafx. No worry about the borrowing of Jtiasa. Jtiasa bet big on extreme El Niño within 3 years.

Icon8888. I will study your valuation method for plantation companies.

By looking at INNO, I guess you have spent much time to do the research for all plantation related counters. INNO used to in my watchlist but I missed the opportunity to pick up at price 1.2 .

Icon888. Your guessing on the interest paid is about that amount. Jtiasa capitalized interest 20 million as Biological Assets every year.

Thanks Icon8888. It sounds reasonable.

I may assume that such high operating costs are unavoidable every year. If this is the case, Jtiasa is heavily relied on the CPO prices that higher than the current level whereas TAAN continues enjoying good profits. Given the existing supply exceeds demand of CPO, It seems that El Niño is probably the only way to help Jtiasa to make more profit in short term.

I am puzzled with the performance of Jtiasa ( past 12 months ) after making a comparison with TAAN. Jtiasa's Oil Palm segment was actually suffering loss of RM 12,247,000 for the past rolling 4 quarters whereas TAAN had generated substantial profit before tax of RM 61,497,000. Furthermore, Jtiasa FFB production was higher than TAAN by 33%.

When I look into the last quarter results of Oil Palm segment, Jtiasa's profit margin is 12.3% whereas TAAN 33.4%. In this case, Jtiasa FFB production is higher than TAAN by 38%. How come Jtiasa was enjoying such a low margin?

No doubt Jtiasa would generate high FFB production in near future but I have reservation on its ability to yield substantial profit given its current inefficient operation results. I am not convinced with the reason of sluggish CPO prices as claimed by the management. Why TAAN did performed better even at low CPO prices. In addition, immature area of TAAN represents 26% of planted area. It will have a high potential growth FFB production in coming years.

Great reverse trend. I have been collecting at cheap prices in the past few days.

Jtiasa's borrowing is trending downward? I just know it had raised 358 million through private placement last year to reduce the gearing level. Going forward, it needs another at least 270 million to complete its mill and fully plant the remaining 7,300 hectares of land. With the current net borrowing of 714 million ( after offset investment in securities 103 million ), this loan would touch 1 billon unless windfall profit is generated from the effect of El Niño .

It is most likely Jtiasa sold major portion of their FFB to 3rd parties mill as they don't have sufficient capacity for further processing. Why profit so low? Mindboggling.

I am still puzzling with the Biological Assets of Jtiasa. Why it costs so high when comparing with TAAN even after excluding interest capitalized? The amount is more than double of TAAN.

Biological assets excluding interest: RM 1,159,816,000 ( RM 18,243/ hectare)
Borrowing interest capitalized as Biological Assets:175,471,000 (total past 8 years)

I don't have to defend myself so let the figures do the talking.

More information for comparison:

JTiasa
Quarter ended 30 Sep 2013 ( Palm oil segment )
FFB production - 234,052 tonnage
Turnover : RM 77,761,000
Profit : RM 9,577,000

Palm oil segment ( past 12 months )
FFB production: 708,859 tonnage
Turnover - 251,806,000
Profit before tax - ( 12,247,000 )


TAAN
Quarter ended 30 Sep 13
FFB production - 169,326 tonnage
Turnover - 88,495,000
Profit before tax - 29,582,000

Palm oil segment ( past 12 months )
FFB production - 531,744 tonnage
Turnover - 274,257,000
Profit before tax - 61,497,000

Jtiasa changed its accounting policies for Biological Assets since FY 2009.

Here is the explanation as stated in the annual report:

"With effect from 1 May 2008, planting expenditure incurred on newly developed land capitalised under plantation development expenditure is not amortised. Replanting expenditure of similar crops on former developed areas is chargeable to the income statement in the financial year it is incurred. In the opinion of the directors, the change in accounting policy provides reliable and more relevant information. This change in accounting policy has been accounted for retrospectively.

Upon maturity, all subsequent maintenance expenditure is charged to revenue and the capitalised pre-cropping cost is amortised on a straight line basis over 25 years, the expected useful life of oil palms. "

How the new policies affect (manipulate) financial performance ? Jtiasa makes profit 2.88 cents/ share in the rolling past 4 quarters. The amortization Biological Assets of Jtiasa is estimated base on the matured area amortized on a straight line basis over 25 years. The amount should have been amortized is RM 46,650,000. This will translate into 3.6 cents/share which is higher than the total profits in the past 4 quarters.

The companies would have shown higher profits not amortizing its Biological Assets:
Rsawit - RM 25,940,650 ( 0.95 cents/share )
SOP - RM 20,368,000 ( 3.4 cents/share )
TAAN - RM 10,975,000 ( 2.2 cents/share )

Summary of comparison between Jtiasa and TAAN. We can guess which company would offer lower risks and faster rate of growth in future.

Jaya Tiasa
Weight average number of shares: 967,997,000

Palm oil segment:
Plantable area: 70,900 hectares
Planted area : 63,574 hectares
Mature area: 55,438 hectares
Immature area: 8,136 hectares ( 13% of Planted area )
Borrowing interest capitalized as Biological Assets: 22,567,000 (2013) 22,820,000 (2012)

Timber concessions with a total area of 713,211 hectares
Reforestation:
Total Land Area: 235,859 hectares
Estimated Plantable Area: 141,308 hectares
Planted Area: 30,978 hectares

PER: 79.7
Gearing ratio: 36.7%
Dividend Yield: 0.43%
Dividend declared in past 12 months : 1%
Average costs / hectare of biological assets : RM 21,000
Non amortization of Biological assets of 1.335 billion

TAAN
Weight average number of shares: 370,537,000 ( 38.3% of Jaya Tiasa )

Palm oil segment:
Land bank: 97,855 hectares
Planted area : 35,345 hectares
Mature area: 26,161 hectares
Immature area: 9,184 hectares ( 26% of Planted area )

Timber concessions with a total area of 362,439 hectares
Reforestation:
Total Land Area: 313,078 hectares
Planted Area : 33,000 hectares

PER: 23.7
Gearing ratio: 27.7%
Dividend Yield: 2.42%
Dividend declared in past 12 months : 10%
Average costs / hectare : RM 9,020
Amortization of Biological assets of 319 million over 25 years

In fact JTiasa is worth to buy from my personal point of view but I have some reservation if someone say that JTiasa is worth better than TAAN after making a comparison.

Lol. We are here having a discussion base on the facts and data. You know how much amortization biological assets charged to P/L amount when JTIASA follows different accounting policies. It is estimated the profit to be reduced by RM 45,580,000 each year ( 1,335,419,000 x 55,438ha / 63,574ha / 25 years )

Please correct me if you guys feel that my data is not stated according to the facts disclosed in annual report & quarterly results. I am welcome for the constructive criticism.

Like this also can . I just posted the data by making a comparison and talk nothing. This is the facts for both companies in the same industry.