KMLoong- another medium-size plantation stock to consider

Background

Kim Loong Resources Bhd ('KMLoong') is involved in the cultivation of oil palm & palm oil milling. KMLoong owns about 12,960 hectares of oil palm estates located mainly in Sabah (of which 1,093 hectares are located in Johore).

Recent Financial Results

KMLoong has just announced its results for QE31/7/2007, where its net profit jumped by 159% q-o-q or 183% y-o-y to RM11.8 million, Turnover has soared 64% q-o-q or 74% y-o-y to RM111 million. The improved performance is attributable to 30%-increase in FFB prices as well as 26%-increase in CPO prices.



Valuation

If KMLoong could maintain the same earning of 6.71 sen in QE31/7/2007 for the full year, its EPS would jump to 26.84 sen. Based on its closing price as at Sept 28 of RM2.41, KMLoong would be trading at a PE of 9.0 times. The stock is trading at a slight discount to the plantation sector's average PE of about 13 times.

Technical Outlook

From the chart below, you can see that KMLoong is in a steady uptrend. Ignoring the sahrp spike-down in February & August, a buy at about RM2.20/30 level is probably near its uptrend "line".


Chart: KMLoong's daily chart as at Sept 28 (courtesy of Tradesignum.com)

Conclusion

Based on the good financial performance & nice technical outlook, KMLoong is a BUY for the medium-term.