29-05-2015, 02:10 AM
Hi CP,
I was going to do the Tuan Sing valuation. But, ended up quite bz and somehow I did the Kencana analysis. Its done early morning... literally.
It sounds crazy. But, I have out of the world valuation figures and my highest valuation (optimistic figure) is like 77 cents with 33 times pe, assuming that CPO prices recover. I used Mundi websites palm oil prices as proxy to forecast the benefit to revenue, as a result of CPO recovery this year.
On the extreme, I made a silly assumption of 23 times PE and that palm prices constant, this resulted in a price of 12.1 cents. Quite unlikely.
With some analysis of the bio assets, I managed to derive an assumption that mature plantation should be 15% more in terms of area, compared to prior years. Certainly, the annual report seems to be pointing to consistently increasing maturing plantations, while a steadily slowing rate of increase in immature plantations. This bodes well, since it points to higher rate of output.
I think if Morph (or anyone else) is entering big into this, they are not wrong. There seems to be a good reason and basis (using my half baked concept of palm biz) for Kencana to be a multi bagger. Gotta believe you for this one.
And I have not loaded any factor for el nino effects and the regulatory impact on bio diesel blending in indonesia. I suspect the prices will be flying off the roof, with those factors loaded in. And, if I didn't account for the fair valuation gain on bio assets and other receivables, this already is giving a pretty high valuation based on optimistic and mid way forecasts. You can tweak the spreadsheet. CP is going to make a pile again. Congrats on your finding.
Guess Mr Mkt still don't think this is the case for now. For Wilmar to buy at 35 cents, this gem shouldn't stay at 20 cents for too long. http://sbr.com.sg/agribusiness/news/wilm...a-holdings
PS: For the rest of the VB, do post your critic. Hope this sheds light on this gem.
I was going to do the Tuan Sing valuation. But, ended up quite bz and somehow I did the Kencana analysis. Its done early morning... literally.
It sounds crazy. But, I have out of the world valuation figures and my highest valuation (optimistic figure) is like 77 cents with 33 times pe, assuming that CPO prices recover. I used Mundi websites palm oil prices as proxy to forecast the benefit to revenue, as a result of CPO recovery this year.
On the extreme, I made a silly assumption of 23 times PE and that palm prices constant, this resulted in a price of 12.1 cents. Quite unlikely.
With some analysis of the bio assets, I managed to derive an assumption that mature plantation should be 15% more in terms of area, compared to prior years. Certainly, the annual report seems to be pointing to consistently increasing maturing plantations, while a steadily slowing rate of increase in immature plantations. This bodes well, since it points to higher rate of output.
I think if Morph (or anyone else) is entering big into this, they are not wrong. There seems to be a good reason and basis (using my half baked concept of palm biz) for Kencana to be a multi bagger. Gotta believe you for this one.
And I have not loaded any factor for el nino effects and the regulatory impact on bio diesel blending in indonesia. I suspect the prices will be flying off the roof, with those factors loaded in. And, if I didn't account for the fair valuation gain on bio assets and other receivables, this already is giving a pretty high valuation based on optimistic and mid way forecasts. You can tweak the spreadsheet. CP is going to make a pile again. Congrats on your finding.
Guess Mr Mkt still don't think this is the case for now. For Wilmar to buy at 35 cents, this gem shouldn't stay at 20 cents for too long. http://sbr.com.sg/agribusiness/news/wilm...a-holdings
PS: For the rest of the VB, do post your critic. Hope this sheds light on this gem.