KLK–Fundamental Analysis (22 May 2014)

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.

KLK Analysis:-

Excel – http://1drv.ms/1jxfohZ

My View:-

– Fair values:
  – EY% – Buy below 15.87, sell above 24.46
  – In my opinion, KLK is fully valued.
– The CPO price moves in a cyclical manner. KLK earnings will improve in the next few years.
– KLK’s current price is at a premium due to the young age of the group’s oil palm trees. Average age of KLK’s oil palm trees is 11 years old as young trees in Indonesia compensate for the older trees in Sabah.
– In longer term, KLK’s outlook is positive as earnings impact will likely be from FY18 onwards. Note that oil palm trees usually start bearing fruits from the 3rd year onwards and the field preparation work may take up to one year.
– Based on Q2 2014 cumulative results, revenue, net profit and FCF increased 19%, 29%, and 549% respectively by comparing to Q2 2013 cumulative results.
– I believe that KLK is in good position to achieve better result in FY14.

Latest Financial – Q1 2014 Financial Report (21 May 2014) http://www.bursamalaysia.com/market/listed-companies/company-announcements/1628097

At the time of writing, I did not own shares of KLK.


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