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

Wednesday, November 3, 2010

How to assess Plantation Co. EPS wrt CPO price movement

Cepat Wawasan Plant (nta RM1.69, Q/Q eps 1.6/ 2.7/ 2.5/ 1.3/ 4.1 sen )
Puzzled over the jump in Q eps, I looked into the company's website info. Info derived from the plantation operation webpage suggest 133, 044 mt fresh fruit bunches (FFB) harvested and milling operation webpage suggest 314,569 mt FFB processed..?
Which is which...? Either a grave error or they are processing/extracting for other smaller planters and deriving a profit.
Anyway, annual production FY 2009, FFB = 133,044 mt. Estimated extraction of CPO = 0.2 x FFB = 26,609 mt
CPO mt/ share = 26, 609/ 215,450,000 shares issued = 0.12 mt/1000 shares
For every RM100/mt increase in CPO, annual EPS = RM100 x 0.12/1000 = 0.012 or 1.2 sen accretive
Therefore up target price (PE 10) = 12 sen

HS Plant (nta RM2.14, Q/Q eps 2.9/ 5/ 4.6/ 4.5 sen )
Production FY 2009, FB = 672, 768 mt. Estimated CPO = 0.21 x FFB = 140,985 mt
CPO mt/ share = 140, 985 / 800 million = 0.17 mt/ 1000 shares
For every RM100/mt up, it adds 1.7 sen to annual EPS . TP up 17 sen

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