Why Biological Assets of TAAN is much lower than Jtiasa in term of RM/ hectare? TAAN is partly indirectly owned by Pec Mo. That's why TAAN is able to fetch land in better location.

It seems that Jtiasa has planted a lot palm oil in peatland. It costs much more due to

" Other than legal and regulatory requirements, it is also not commercially sensible to develop on deep peatlands because they pose a challenge to machine mobility and require a higher fertiliser input. The cost of constructing and maintaining the roads would be very high, as materials like stone will have to be imported from elsewhere. Crop stability will also be an issue. The high water content of peatlands mean that palm oil plantings often have to be made on elevated pedestals to prevent the roots from being in standing water. As a consequence, many trees fall off due to lack of support. "

Now, I understand why Biological Assets for Jtiasa is stayed at sky high in term of RM / hectare.

Extract from Wilmar:

Peat is an accumulation of partially decomposed vegetation matter. Over time, the waterlogged soils prevent the organic matter from fully decomposing, thereby creating a thick layer of peat soil, also commonly known as peatland. Peatlands perform a significant carbon storage function for the planet.

In recent decades, huge amounts of carbon stored under tropical peatlands have been released into the atmosphere due to deforestation, land use change and fire activities. Such events have undone and upset the carbon sink function and as a result, compounded the problem of global warming.

Wilmar has a policy of not establishing plantations on deep peatlands (peat soil depth of 3 metres or more), in accordance with the Indonesian national regulations. In lowland areas where shallow peatland (less than 3 metres) development is permitted, we adopt a sound hydrological management approach that takes into account critical parameters such as water levels, stream discharge properties, flooding, water quality, peat subsidence, soil properties, erosion sedimentation and fire incidence.

Other than legal and regulatory requirements, it is also not commercially sensible to develop on deep peatlands because they pose a challenge to machine mobility and require a higher fertiliser input. The cost of constructing and maintaining the roads would be very high, as materials like stone will have to be imported from elsewhere. Crop stability will also be an issue. The high water content of peatlands mean that palm oil plantings often have to be made on elevated pedestals to prevent the roots from being in standing water. As a consequence, many trees fall off due to lack of support.

It is CPO that need to go through refinery. FFB is processed to produce CPO. Many plantation companies have FFB processing plant.

No worry. There are plenty of time for transporting. Shelf life is almost 6 months.

Extract from Commodity Knowledge Center:

There are a number of factors which impact the quality of palm oil during storage. These factors are light, oxygen, moisture and heat. In order to maintain a the quality of palm oil during storage these elements must be properly managed.

Crude palm oil is stored in steel tanks at a temperature between 88 and 105 Fahrenheit. This temperature is required in order to prevent solidification and fractionation. During filling and draining of the storage tanks, the temperature will be increased above the 105 Fahrenheit. The storage tank will never be completely filled, because the headspace is filled with CO2 to prevent oxidation.

The maximum storage period of palm oil is 6 months. After 6 months period the palm oil has an increased chance to turn sour and the acid level of the oil will rise to unacceptable heights.

The movement of share price is much depend on CPO prices. Alternatively, CPO processed from FFB ( peat land ) can be transported to other refinery. It may incur more transportation costs.

The contribution of plantation segment from Dellyod is much higher than MKH in term of EPS.

Dellyod:
Number of shares: 96,782,283 ( 31% of MKH )
Planted land: 12,751 ha ( 85% of MKH )
Mature area: 12,751 ha
Prime Mature area(estimate) : 4,028 ha
Young Mature area: 8,723 hac

MKH:
Number of shares: 314,427,000
Planted land: 14,400 ha
Mature area: 13,800 ha
Prime Mature area (estimate) : NIL
Young Mature area: 13,800 hac

Bought some. A good fundamental company with dividend yield 3%. Not many people know about this company due to lacking publicity or coverage. I had to dig out my old records to study its future potential in plantation segment.

If you ignore the effect of Rupiah devaluation temporarily, it is a good choice to pump in the money. Bear in mind, its plantation segment would have another 24% FFB production growth in year 2014 when achieving almost 100% of mature area.

Listing of its plantation units were speculated 2 years ago. Any fresh news?

If i am not mistaken, its fully planted area is 12,751 ha.

Everyone has different ways to control their emotions in trading/investing. It depends on the individual investor ability or preference to defend the external pressure during the high volatility of share price.

Emotion can be easily ignored through:
- not to watch share price movement
- buying good fundamental companies on regular basis ie quarterly

Personally, I am trying to control my emotion through
- setting criteria in managing or picking a stock
- comfortable portfolio allocation
- exploiting a small margin facilities
- building a strong believe by studying fundamental of companies & making comparison
- Focus in company's bottom line and debt level
- identify my ultimate motive ( play zero sum game or investing )
- pressure reduction through profit taking or loss cutting

Dellyod would be able make some profit in the coming announcement. The effect of unrealised loss on foreign exchange would probably be RM 8 million.

Same same. You have done your homework too. This coming quarter results is going to be better since the devaluation of Rupiah against RM was 4.6% only as compared to last quarter 14%.

My personal view. Knowledge and experience alone are not the main factors to determine whether an investor can be a winner or loser in the market. More crucial is the ability to control our Fear and Greed in order to be successful in investing.

It's a zero sum game if you trade shares of a company without paying any cash dividend or capital repayment at all.

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.