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Tuesday, August 01, 2017

UTDPLT: Earning Soared

Background

Unoted Plantation Bhd ("UTDPLT") is involved in the cultivation and processing of palm oil, coconut and other plantation crops in a sustainable manner. Its estates are located in Malaysia and Indonesia, covering a total area of 50,855 hectares. For more, go here.

Historical Financial Performance

UTDPLT's top-line and bottom-line are both approaching the high recorded in FY2011. If profits can surpass the level achieved in FY2011, UTDPLT's share price may break to new high- similar to the 2010 upside breakout of the RM12.00 mark which led to the rally to RM27 by 2015. This is the basis for a call to track UTDPLT financial performance fro the next 1-2 quarters in anticipation of profit & price breakout.


Graph: UTDPLT's last 52 quarters' P&L
 
Recent Financial Results

For QE30/6/2017, UTDPLT's net profit rose 41% q-o-q or 52% y-o-y to RM110 million while revenue was mixed - down 6% q-o-q but up 28% y-o-y - to RM355 million. Profits rose q-o-q due to better financial results from its plantation & refinery divisions. The plantation division registered a 41.8% increase in the profit before tax in the current quarter from the previous quarter mainly due to a combination of higher production of CPO and PK, lower cost of production of CPO and a higher average CPO price achieved. The refinery recorded a 36.3% increase in profit before tax mainly due to more favorable hedging and trading positions.


Table: UTDPLT's last 8 quarterly P&L

Prospects For FY2017

Like other plantation companies, UTDPLT enjoyed recovery in palm oil production after the passing of El Nino in 2015-2016. To cap it off, crude palm oil prices had rallied due to concern that the recovery in overall palm oil production for the full year 2017, may not be as large as initially expected. Higher prices and output are likely to lead to a satisfactory year for FY2017.

Valuation

UTDPLT (closed at RM28.20 in the morning session) is now trading at a PER of 15.2x based on last 4 quarters' EPS of RM1.85. Its dividend yield is quite decent at 4.1%.

Technical Outlook

UTDPLT is in an uptrend with support from its 10-month SMA line at RM27.00. That support also coincides with the support from the horizontal line.


Chart 1: UTDPLT's monthly chart as at July 31, 2017 (Source: ShareInvestor.com)
 


Chart 1: UTDPLT's monthly chart as at July 31, 2017 (Source: ShareInvestor.com)

Conclusion

Based on good financial performance, fair valuation & positive technical outlook, UTDPLT could be a good stock for long-term investment.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

4 comments:

Heong Sam said...

Hi Alex. I'm reading your blog on a daily basis as I found it very fruitful and I want to take this opportunity to express my gratitude for your great work. I'm currently looking at 1 particular stock which is Insas Bhd. Could you advise the fair value or potential target price for this company? I'm of the opinion that the share price is undervalued as it owns substantial holdings in Inari and Hohup. I wish to check with you to confirm that my understanding is correct. Thank you & looking forward for your reply or perhaps a write-up article for this stock.

Chun Mun said...

Hi Alex,
Can you comment on YTL which hit the 52 weeks low

Alex Lu said...

Hi Chun Mun,

YTLCorp seems to have broken its long-term uptrend line at RM1.45. Its monthly MACD is below the zero line- which indicates downtrend. -DMI is above +DMI- again indicating downtrend. ADX has just crossed above 20- indicating increased momentum.

A case for a mild decline can be made by comparing the reaction low with the stock's NTA. In 2008 and 2011, YTLCorp made a low between 0.9x to 1x its NTA. Assuming the same applies today, the low may be RM1.26-1.40.

Alex Lu said...

Hi Heong Sam

Insas Bhd is still in an uptrend but it shows signs of topping out. I like to see the stock staying above the support at RM1.00 or better still going above RM1.14. Bearish divergence can be seen in volume traded & stochastic indicator. Similar signs appeared in early 2010 & middle of 2014 just before the stock peaked. Let's see how this will play out next 3 months.

BTW you mentioned Inari and Hohup- two stocks that have quite different share price performance in the past few months. I like Hohup but the share price has been a big disappointment. It should do better with the development in hand. Inari has not disappointed its shareholders and my regret is that I didn't call a buy in 2013. If both Inari continues to go higher and Hohup recovery begins, Insas's uptrend may continue.