This will be the last time I post something on Jaya Tiasa until it goes to RM13.00 cum basis or RM4.50 on an ex-basis. Naturally Jaya Tiasa is on a 15 year high, and naturally investors are loathed to buy at current levels. So, you have to do your own research and decide. 
To me, this is the easiest, no-brainer, for an easy 50% within a short period of time. Possibly the best recommended stock in my 6 years of blogging.
You already have the convincing comparison to Rimbunan Sawit. Now, lets compare to another very attractive counter, IJM Plantations.
IJM Plantations is a 55%-owned subsidiary of IJM Corporation. The principal activities of the group are the cultivation of oil palm, investment holding and provision of management services to its subsidiaries. The group had planted area of 30,528 hectares, of which 77% was matured. It presently owns and operates 11 oil palm estates, complemented by four palm oil mills.
IJM Plantations' market cap is RM2.65bn. Jaya Tiasa's at RM2.7bn. Jaya Tiasa has 5 mills.
IJM Plant 3 most recent quarters saw net profit hitting RM150.4m. If we just add another RM55m for the last quarter = full year should be RM205.4m. Jaya Tiasa is slated to make RM240m in 2012.
240/205.4 = 1.17
1.17 x 2.65 = RM3.09bn
RM3.09 / 2.7 = 1.14 x 9.56 = RM10.90
Jaya Tiasa has a base valuation at RM10.90.
If you look at the plantation hectarage, IJM Plant's 30,528ha compared to Jaya Tiasa's 61,000ha. If you use that, Jaya Tiasa's valuation should be doubled that of IJM Plant alone. Mind you, that is on hectarage of palm oil, not even counting the 700,000ha of timber concessions under Jaya Tiasa. Of course Jaya Tiasa's plants are a lot more youthful, but it only takes another 3-4 years to catch up.
So, 2.65 x 2 = RM5.3bn
RM5.3bn / 2.7 = 1.96 x 9.56 = RM18.70
The figure RM18.70 is just on palm oil alone. We did not calculate the timber concessions which is almost 10x the size of Singapore.
Naturally, you seem to have to hit people on their heads to see the gross under valuation. A share will re-rate on a gradual basis, not overnight. As mentioned before, the recently announced exercised is single most important catalyst that will bring up the valuation of Jaya Tiasa. With sufficient liquidity, comes proper valuation.
Then again, there are many friends who would suggest 5 other palm oil counters to me when I said Jaya Tiasa. You know, the TDMs, Kretams, etc ... They are all good, but none will have the upside of Jaya Tiasa.
For a sustained run in a small to mid-sized palm oil counter, you need:
a) Capital - for clearing, planting and also acquisition of more plantation land (who do you think wins this, with the 15% new share placement, Jaya Tiasa will be raising almost RM400m cash)
b) Land Acquisition Strategy - There should be a prolonged plantation land acquisition strategy. Again, which small-mid sized company you think has a huge leg up on the rest? Its the Tiong family we are talking about
c) Strategy To Be #1? - Most small mid sized counters are caged in that category as they do not have the "vision", leadership or ability to take the company to be the top 3 players in the industry. Knowing Tiong for how he does business, the deliberate way the family went about moving into palm oil, do you think they will stop at 70,000ha?
NOTE: The above opinion is not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees. I may already have positions in the above mentioned counter. The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.
OK, the Nasdaq has gone to an 11 year high. More localised news, the Thailand floods wreaked havoc on the HDD and related components supply chain. While this blog picked it up at 50 sen, JCY's current price and dramatic change in fortunes seems implausible 2 months back.
If you look at the recovery in Notion Vtec, it was OK but nowhere as spectacular as some of the rest in the same industry. There is still a lot of unknowns and uncertainty as to who are the real winners and losers from the Thailand floods.
While JCY did not see any of their factories affected, and they benefited from strong additional clients. I think some investors still think Notion Vtec came off from the floods worse than before. Management has guided analysts that 1Q2012 will see revenue declining 40% q-on-q. However, there are strong newsflow from the industry that Notion Vtec actually benefited significantly from the floods as well. Apparently their Thai factory which was affected only contributed a small portion of revenue.
If one were to dig deeper, fortuitously, they have excess capacity in Klang, and it appears that they have ramped up production there owing to the fact that they have secured 3 new big clients owing to the redirection of logistic supply chain away from the affected areas in Thailand.
Some are hinting that profits and revenue are even higher now than their results prior to the floods. If that is going to be the case, then the share price should be closer to RM2.40-2.50 and not dawdling below RM2.00.
Notion Vtec mother share price and volume:
| 03/02/2012 | 1.97 | 1.91 - 1.97 | 1.91 | -0.06 (3.05%) | 506,800 |
| 02/02/2012 | 1.96 | 1.94 - 1.99 | 1.97 | +0.01 (0.51%) | 175,800 |
| 31/01/2012 | 1.94 | 1.92 - 2.03 | 1.96 | +0.02 (1.03%) | 1,654,800 |
| 30/01/2012 | 1.84 | 1.82 - 1.94 | 1.94 | +0.10 (5.43%) | 890,800 |
| 27/01/2012 | 1.83 | 1.80 - 1.84 | 1.84 | +0.01 (0.55%) | 270,000 |
| 26/01/2012 | 1.82 | 1.82 - 1.86 | 1.83 | +0.01 (0.55%) | 305,300 |
| 25/01/2012 | 1.85 | 1.82 - 1.86 | 1.82 | -0.03 (1.62%) | 189,300 |
| 20/01/2012 | 1.84 | 1.84 - 1.85 | 1.85 | +0.01 (0.54%) | 45,000 |
| 19/01/2012 | 1.86 | 1.83 - 1.86 | 1.84 | -0.02 (1.08%) | 93,100 |
However, if you want to spot something brewing, the sharp uptick in the warrants and volume as well over the past few days may indicate some substantive good news or corporate developments to follow soon.
NOTE: The above opinion is not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees (donations are welcomed though). The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. I may already have shares in the above mentioned stock/s. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.
Some investors are still in a maze with regards to Hibiscus. Yes, you have the oilfields now, but don't you still have to get some oil? I approached the company with as much cynicism as the next guy. I have met the top 3 management team and grilled them, looked over their decision making process and the oilfields they ended up with - I came away feeling optimistic. 
They have parlayed their expertise, and basically partnered with a much sought after group (who have recently ventured on their own - they actually created a unique way of locating "decent oilfields" by way of analysing gravity and matter in the prevailing seabed). Did you know that the sea levels are not the same all over the world?
Thats because the gravity differs, in India it could be 30m-50m higher than somewhere else. The scientist team deciphered that that can be traced to the the kind of seabed underneath which gives rise to "potential for locating oil resources"). Their technology was highly sought after and they sold their company, but was barred from doing similar work till now, so they are striking out on their own. The fact that Hibiscus team got to work with them was a stroke of confluence of events, they needed the funding and oil price was weaker in the first half of 2011.
Hence you can say their jv with Lime was a pretty good move. There will be three catalysts coming for the stock:1) the upcoming acquisition of anoedther significant oilfield2) the listing of Lime on London exchange, which in effect allows buyers of Hibiscus to be in the position of pre-IPO investors at a good price, likely to be done sometime June 20123) actually striking oil, which I think is highly likely than not base don the available data and pre-selection process by the Lime group (the Lime group had their pick of whichever oil fields they wanted based on their reputation and technology expertise in the past)
That is why I think, as some who know more about what they are doing, Hibiscus is a pretty good thing. I keep seeing initial big shareholders loading up more shares and the entry of a couple of significant new shareholders as well from Singapore. Suffice to say, I am pretty confident that the share should be closer RM1.00 by year end, just based on the above fundamentals.
Hibiscus : Adding some zest (RHB Research)
Visit Note
- Hibiscus announced its “qualifying acquisition” (QA) involving a 35% equity stake in an early-stage exploration company called Lime Petroleum with three assets in the UAE and Oman for a total cash consideration of US$55m (or RM172.1m). The proposal – subject to approvals from Securities Commission and shareholders (excluding management’s 20%) – is expected to be completed by 1HCY12.
- After the QA is approved, we believe Hibiscus’ higher risk profile comes with potential significant upside arising from the development of Lime’s estimated 200.7mmboe risked recoverable resources. Other than E&P risks, other risks include: 1) Rex’s (Lime’s originator for the Middle East assets) proprietary exploration technology is commercially unproven; and 2) Lime’s funding for its work plan is sufficient only for FY12. 
- We estimate Hibiscus’ 35% stake could be worth RM1.01-1.33/share based on the successful 50% commercialisation of resources from the four wells to be drilled in 2012 work programme and the implied NAV/boe range of US$4.9-6.5/boe. This implies 33.2-76.1% upside to Hibiscus’ current share price.
- Hibiscus’ proposed QA is exciting on two counts: 1) the significant risked resources identified relative to the size of the company; and 2) the relatively inexpensive entry cost into the assets vs. its potential value (based on NAV/boe). There are also the potential upsides from new concessions to be acquired in the future, including the Fujairah block in 2012.
NOTE: The above opinion is not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees. The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.
