Remember the LORD for it is he who gives you the ability to produce wealth and so confirms his covenant... Deut. 8:18

Sunday, July 19, 2009

Plantations = Sustainable Business

Plantations:
I've been asked numerous times why I continue to advocate buying into plantation stocks. The simplest digestable reason is because the business is generally sustainable. It doesn't take rocket science to figure this one out.
Sime, IOI, KLK, GenP are investor's favourites and mine that see seemingly active trades. But for my core holding of plantation stocks that I buy and hold for dividend yield, here it is: TH plant, HS plant, TDM.

Fair Price Evaluation:
An extremely simple method to evaluate a reasonable fair price for some dividend yielding stocks is to take the historic dividend paid out/dividend yield. Assume earnings are sustainable, here's some valuation..
TH Plant. 14 sen/0.09 = 155 sen or RM 1.55
HS Plant. 10 sen/0.05 = 200 sen
TDM. 14 sen/0.08 = 175 sen

Let's look at others:
IJM Plant. 12 sen/0.05 = 240 sen
Boustead. 30 sen/0.09 = 300 sen
Sime 45 sen/0.06 = 750 sen
IOI 17 sen/0.04 = 425 sen

For some non-plantations:
Esso. 12 sen/0.05 = 220 sen
Pet Dag 45 sen/ 0.05 = 900 sen or RM 9.00
PLUS 16 sen/0.05 = 320 sen
GenM. 8 sen/0.03 = 265 sen
BjToto 26 sen/0.05 = 520 sen
Leader 3 sen/0.04 = 75 sen
Prestar 1.5 sen/0.03 = 50 sen
TM 26 sen/0.09 = 289 sen
Tanjong 73 sen/0.06 = 1216 sen or RM 12.16
YTL P 11 sen/ 0.05 = 220 sen
PPB 23 sen/0.02 = 1150 sen
Astro 10 sen/0.03 = 333 sen
MPHB 10 sen/0.06 = 166 sen
IJM 25 sen/ 0.05 = 500 sen
Bursa 18 sen/ 0.03 = 600 sen
KFima 3 sen/ o.04 = 75 sen
Pantech 3 sen/o.o4 = 75 sen
Ann Joo 12 sen/0.06 = 200 sen
S Steel 12.5/0.07 = 178 sen

There you go....
You can choose any stocks, look up its earnings, its historic dividend payout, its purported dividend yield and evaluate a fair price to purchase the stocks...

3 comments:

sharine said...

VERY GOOD INFORMATION FOR NEW INVESTOR LIKE ME. WHAT ABOUT THE FAIR VALUE FOR PUBLIC BANK, MAYBANK, CBIP AND GENTING SHARES.

Remnant 613 said...

pbb 76sen /0.06 = RM11.00, buy on dip, can hold for dvd payout.. beware of tan sri teh's health

mbb 52sen/0.08 = RM6.50 but i suspect dvd is not sustainable. so if you're willing to accept 26sen and 4% yield then RM6.50 is still fair value.

genting 7sen/0.01 = RM7.00 but i suspect dvd is not sustainable. dont buy and hold long term.. buy and take profit..

cbip 5sen/0.02 = RM2.50

Remnant 613 said...

the above valuation is for genting international (GENT).
genting malaysia (GENM) fair price is RM2.70
happy investing