This study is created specifically for educational purposes only where I will use it on a special occasion later. I may not update analysis of this stock in the future.
Excel – http://1drv.ms/1kPJ9qP
– Fair values:
– Absolute EY% – Buy below 1.67, sell above 2.58
– HSPLANT is currently fully valued. Besides, its EY% is only 4.3%.
– Over the years, HSP’s upside growth potential has been limited due to the lack of land expansion, which could be exemplified by a mere 1,769 Ha increment in its total planted area, from 33,782 Ha in FY 2008 to 35,551 Ha in FY2013. In contrast, its peer, IJMP’s total planted area has doubled over the same period, from 25,293 Ha to 52,863 Ha. To further enhance HSP’s future earnings in the longer-term, it is essential for HSP to grow its FFB production which has been relatively stable. Perhaps HSP needs to get out of its comfort zone and start to be more aggressive in expanding its landbank. And given the fact that HSP is a productive planter with FFB yield and OER outperforming the industry average, coupled with a high average EBIT/Ha of RM7,136.54, these imply that it has the capability to achieve better results.
– The CPO price moves in a cyclical manner. HSPLANT earnings is expected to improve in coming years.
– I think HSPLANT valuation is not attractive at this moment. I will consider to enter if there is any buy signal in technical.
Latest Financial – Q4 2013 Financial Report (26 Feb 2014) http://www.bursamalaysia.com/market/listed-companies/company-announcements/1549885
At the time of writing, I did not own shares of HSPLANT.