Posted by sklyte > 2014-04-24 11:31 | Report Abuse

Following-up on our previous note dated on 22 Jan 2014, we revise Southern Acids (SAB) fair value from RM7.77 to RM9.20 after adjusting our previous valuation of RM20 psf to RM27 psf (inclusive of land conversion cost) on SAB‟s 644.49 acres in Kota Kemuning, Shah Alam, which is now worth at least RM758m, larger than the company‟s current market capitalization of RM572m. Our new valuation is based on the latest transacted price by Eco World Development which had recently purchased 308.72 acres of land in the vicinity for RM470.6m or RM35 psf. Given its strategic accessibility and freehold land status, we find that SAB should deserve a higher value.

An established name in oleochemical industry... SAB remains primarily an oleochemical player with roots in Klang tracing back to the late 1970s. With an annual capacity of 100,000mt, its trading partners for its palm-based fatty acids and glycerine products are mainly from US, EU, Japan, China, Korea, Middle East and India. The company, which was listed on the Main Market in 1991, eventually diversified into oil palm plantation (8,483ha), healthcare (Sri Kota Specialist Medical Centre in Klang with 232 beds) and dry bulk warehousing and export loading services (capacity: 40,000mt at North Port, Klang). The founders, under a consortium, currently own about 48% followed by Lembaga Tabung Haji, 13%. Plantations dominate the company‟s bottomline, making up 56% followed by oleochemicals 40% while healthcare and warehousing & conveying services contribute the remainder. Interestingly, the company also holds about 4.6% equity in Main Market-listed Paramount Corporation, valued at RM26.2m, based on current market capitalization.

… but has a hidden gem waiting to be unearthed. SAB owns a 644.49-acre freehold plantation estate in Kota Kemuning which currently sits on the balance sheet at RM5 psf. The landbank, which is easily accessible via the Shah Alam-Kemuning Highway and North South Expressway, is adjacent to the RM11bn Bandar Rimbayu project which was launched by IJM Land in 2012. However, management recently indicated that there are no plans to develop the said land in the next 1-2 years, which we estimate could reach up to about RM10bn in GDV if it were to do so.

Solid balance sheet and steady earnings performance. SAB has reported steady earnings growth for the last three years on the back of improved plantation sales contribution while the oleochemicals business remain steady. Besides that, the company‟s balance sheet and operating cash flow are healthy. Its current cash position stands at RM148m with zero borrowings. For the 9mFY14 financial results, the company‟s cumulative core net profit of RM30.4m already accounted for 83% of the Group‟s earnings in FY13. We expect a minimum DPS of 6sen to be announced during the 4QFY14 results next month.

Source: PublicInvest Research - 24 Apr 2014

Posted by lotusf1 > 2014-04-24 13:12 | Report Abuse

SkYlite ..tis stock been lying low since jan.014 i.e. its first jumped - aftr pblic research up ist TP-7.77
;.tday it moves up vry high again based on revised 9.70 by preserch.
.i think....aftr tdys price jumped .it may be going into the freezer again.. fr quite somtime..Until of course magic words suddenly turned the whole assets into full scale sustainable earnings..in order .to realise the gains..from their assets...

Posted by kltan > 2014-04-24 13:32 | Report Abuse

IJM Rimbayu is selling like a piece of hot cake right now. A semi-D (land area 32 x 70) is selling at RM875k. Previously I heard the profit margin for the developer is about 30%. Imagine how much can SAB make if it decides to develop the land by itself? Assume 1 acre of land is able to build 12 Semi-D (you need to allow extra % of land for road, etc). 644 acre can build 7728 semi-D, which is 6.5B. If we assume 30% profit margin, that will work out to be 1.97B, or RM14/= per share. The target price should be higher than RM14/= considering it has over 10,000 acre of palm oil plantation in Indonesia, a hospital in Klang, a lot of cash with zero debt, etc.

Posted by valuemaster > 2014-04-24 13:50 | Report Abuse

Wow are u guys late or early?anyone has the research report? If suddenly behaves like mkh i duno what to say, anyone mind to ppst it here?

Posted by stockcrazy > 2014-04-24 14:12 | Report Abuse

dare to buy???

Posted by lotusf1 > 2014-04-24 14:21 | Report Abuse

Sorry,lttle coorections- it is not Trget price ( tp)but Fair value frm 7.77 ,9.70 given PResearch...

Posted by kltan > 2014-04-24 14:21 | Report Abuse

I found this counter way before Public Bank initiated the coverage. My target price is not less than RM10/=.

Posted by SJaladdin > 2014-04-24 14:32 | Report Abuse

HOW MUCH public tp?

Posted by sklyte > 2014-04-24 16:05 | Report Abuse

9.20, but pe for plantation is only 5x, ridiculous.. should be 10.50 if use 12x for plantation

Posted by lotusf1 > 2014-04-24 17:42 | Report Abuse

2mrrow likely to be profit taking bcz tdays gain up t d roof! Anyone dare 2 buy tmrrwow..

Posted by Cipta > 2014-04-24 18:24 | Report Abuse

Good analysis guys! It reminds me ORIENT two years ago.

Posted by lotusf1 > 2014-04-24 20:27 | Report Abuse

Just like in jan 014 sab price jumped soon after presearch posted fair value to 7.77; after that its price fell n neve recover till a couple ot days ago..when its price risen slow,y but surely..
Pbreasearch dropped another bombshell tday when it raised fair value to 9.20..the stock closed .81 cts tday..my prediction tmorrow is that the gungho excitement will falter n also knee jerk reaction cools down just like last year..aprt from its oleo business the rest is just a fairy tale which rmains o be seen n needing executions which is long wy togo..

Posted by Beh Marcus > 2014-04-24 21:37 | Report Abuse

Nice closing

Posted by Melaos > 2014-04-24 22:24 | Report Abuse

wow, what happened today? big news coming?

Posted by tjhldg > 2014-04-25 00:46 | Report Abuse

huat aarrrrrrrrrrrr

Posted by Beh Marcus > 2014-04-25 00:48 | Report Abuse

Wakakakaka huat ar

Posted by kltan > 2014-04-25 09:47 | Report Abuse

Amazing

Posted by Alex Leow Sze Shen > 2014-04-25 10:03 | Report Abuse

Kena UMA if like that

Posted by sklyte > 2014-04-25 10:23 | Report Abuse

won't kena UMA, this counter is worth RM10 minimun, public bank use 5x for plantation which is not possible, even young companies like ta ann/jtiasa trades at 14x

Posted by matrix6050 > 2014-04-25 10:47 | Report Abuse

cantikk~!

Posted by Beh Marcus > 2014-04-25 12:11 | Report Abuse

Cantik sekali .... Huat ar

Posted by Lucas Chan > 2014-04-25 12:17 | Report Abuse

5.70 is it the limit today?

Posted by chonghai > 2014-04-25 13:30 | Report Abuse

The only way to unlock the value of SAB is to sell the land or start a development project. Somthing must be going on, causing the price of this thinly traded counter to move.

Posted by nsk82 > 2014-04-25 13:37 | Report Abuse

UMA is served today. run

http://www.bursamalaysia.com/market/listed-companies/company-announcements/1604065

Posted by PasangKia > 2014-04-25 13:45 | Report Abuse

This company is from Pasang, very undervalued.

Posted by PasangKia > 2014-04-25 13:48 | Report Abuse

Pasang has BKT seafood and lots of taukey and listed companies holding cheap lands bought long ago.

Posted by juliakong > 2014-04-25 14:00 | Report Abuse

Land value in property holdings of listed company never benefit the general shareholders wan. They (The owner & majority shareholder) will do some deals so that it will masuk their personal pocket.

Posted by PasangKia > 2014-04-25 14:16 | Report Abuse

Si em si o.. julia. Mai luan luan kong o. Pian mor sut meh. Kong yong yii.

Posted by PasangKia > 2014-04-25 14:19 | Report Abuse

Teo UMA liao, lur kor luan luan kong, share beh ki liao ar ni. Mai luan luan kong ok.

Posted by PasangKia > 2014-04-25 14:22 | Report Abuse

juliaKONG, lur mai luan luan KONG.

Posted by nsk82 > 2014-04-25 14:22 | Report Abuse

see you @ rm 5.29

Posted by Joel > 2014-04-25 14:59 | Report Abuse

Kena UMA lain hari akan naik balik , dun worry !
Keep and told tight !

SAB really worth to collect !

Posted by aliyusof > 2014-04-25 15:24 | Report Abuse

Look strong.....

Posted by juliakong > 2014-04-25 16:24 | Report Abuse

Hahaha

Posted by joeter999 > 2014-04-25 18:22 | Report Abuse

kena UMA...base on what standard the joker implement?

Posted by kingleecha > 2014-04-25 18:43 | Report Abuse

What is the punishment after kena UMA?

Posted by Elvin Beh Chun Yen > 2014-04-25 20:07 | Report Abuse

if only they announce share split or bonus issue.

Posted by Joel > 2014-04-25 22:10 | Report Abuse

SAB , ... what I herad fr my remisier,
kena UMA price also steady to grew.

What Institutions were expected for SAB on Monday
might fly over RM6.00 above simply bcos SAB really really
undervalued stock !

SAB- Land valueable related to Ecoworld project !!!

share split or bonus issue here is another discussion for SAB
The main point is The Value of SAB have in it !!!

Of cos If one day SAB campany announce for share split or bonus issue
then will be Great !

Advice: For those who bought SAB told and keep.
Dun simply throw valueable stock like SAB.

Posted by nicermannson > 2014-04-25 23:24 | Report Abuse

Stupid SC!! What is the reason for issuing uma? This is a grossly under valued stock. UMA should be issued to a manipulated and over valued stock. Action should be taken against auditors and directors who sell down their shares six months before their poor financial report is made public.

Posted by pang72 > 2014-04-25 23:25 | Report Abuse

A bit too explosive. Can not believe. Sold it today n switch to pmetal

Posted by tjhldg > 2014-04-26 01:57 | Report Abuse

kikikikiii ... niceman .. uma .. expected lah ... night so fierce within few day time ... : )
and tonight dow jone down 100 ++ ... monday early early dapat buy back lah ...kikiki

Posted by nicermannson > 2014-04-26 02:03 | Report Abuse

taugeh tj, lu huat. gua aiyoyo arggg tak masuk

Posted by ycyong > 2014-04-26 07:18 | Report Abuse

Can explain the term UMA stand for?what impact do this have on SAB share price.?

Posted by Elvin Beh Chun Yen > 2014-04-26 07:40 | Report Abuse

Keep till RM8 no problem. With the small liquidity, I think it's possible :)

Posted by pang72 > 2014-04-26 08:56 | Report Abuse

Uma again becomes cash counter. You will see water fall free fall

Posted by hoeleong > 2014-04-26 10:52 | Report Abuse

Any counter that have similar story like this ? With deep undervalued book value and huge plot of land in Klang Valley ..pLs recommend ? It could be another SAB, Brem and Daiman

Posted by Joel > 2014-04-26 13:55 | Report Abuse

No, SAB is diffrent with Brem & Daiman.

Posted by kltan > 2014-04-26 14:03 | Report Abuse

Dutaland: 70+ acre of land next to Istana in Jalan Duta.
MuiProp: >1000 acre of land along the highway connecting Port Dikson and Seremban city.
Kseng: A lot of land (>2000 acre) in JB which has not been re-valued since 1980.

Posted by Stockman > 2014-04-26 15:16 | Report Abuse

Don't scold SC. They just like good dog. If you run, sure they chase U. So if you are good stocks, no need to worry ;-)

Posted by joeter999 > 2014-04-26 15:23 | Report Abuse

KEURO !! with RNAV RM 4.96 per share, I will work out the calculation and let u know later...