JAYA TIASA - From Timber To Oil Palm Tree

Recently a friend of mine asked me how do I look on Jaya Tiasa Holdings Berhad since its share price slumps over 25% from its peak of around RM10 (price before Ex-bonus issue) in April, so let me share my opinion about JAYA TIASA (JTIASA) here.

JTIASA is believed to be sister company with Rimbunan Sawit. Both of the companies are controlled by Sarawak tycoon, Tiong's family. Different from Rimbunan Sawit, besides of oil palm operation, the main revenue of JTIASA comes from timber. JTIASA has forest concessions of 713,211 hectares, 83,480 hectares of oil palm plantation (55,766 hectares planted) as per 2011.

While the timber business counts for around 3/4 of the total revenue of JTIASA, most of the profit is actually came from oil palm plantation. Based on the financial report end 30th June 2012, it shows that around 65% of the total profit comes from oil palm. Monthly production reports wise, recently the production of timber is stagnant while the production of oil palm is actually improving. Besides, the oil palm plantation of JTIASA is still very young (the average tree age is around 4 - 6 years old), we can say that oil palm will become the main growth engine for JTIASA in the future.

Anyway, currently the oil palm price is really not doing well at the moment. The CPO (crude palm oil) price shrinks dramatically from the peak of RM 3,600 level per metric tonne in April to RM 2,700 level recently. Too many bad news are haunting the CPO price currently, e.g. the increase of inventory level amid the growth of production is faster than export, Indonesia's export tax cut on CPO from 15% to 13.5%, and the prediction of better soy oil production due to better weather in America.

I don't think JTIASA will come out an exciting result for the next coming quarter due to weak CPO & timber price. Currently the company is doing shares buy back at price range of RM2.40-2.45 to support the price of JTIASA. I will only see bright future on JTIASA should the CPO price can stand at RM 3,000 level or above in the future.

Technical wise, from the chart above, currently JTIASA is trending downward. It may have some chances to get a technical rebound to 2.75. The immediate support level is 2.40. Should the price closes 3 bids below 2.40, the support level will be violated & the down trend will dominate the price movement. The next support level will be 2.00.

Note: The above content is just a blogging activity that purely share my investment thoughts & ideas and should not be used as recommendation to buy or sell any securities. I may already have position in the above securities. Any action that you take from the opinions or information of this blog is solely on your own responsibility. Please consult your investment advisor before you make any investment decision.

The Value of ASTRO IPO

Finally, the ASTRO IPO is open for subscription! The subscription is starting today until 1st of October 5.00pm. The indicative price of ASTRO IPO is RM3.00, which is much lower than the initial indicative price that has been set for MITI investors previously (RM3.60). ASTRO is expected to be listed on Bursa on 19th October 2012.

Although RM3.00 looks more attractive compare with RM3.60, it is still quite expensive in terms of valuation. ASTRO now is offered at PE of around 26 times & dividend yield of almost 3% (75% payout). Anyway, with debt of RM3.66 billion & decreasing profit for the quarter end of April 2012 amid the strict challenges to ASTRO in the future. Also, there is no more monopoly for ASTRO since TM is started to enter the pay-TV market as well via its Hypp TV. I think the growth of subscribers for ASTRO will be going slow or flat in the future.

People will still go for ASTRO IPO because of wishing to make some fast money on the listing date of ASTRO. Anyway, I don't think ASTRO will be trading at very high premium upon listing, RM3.20-3.30 should be reasonable, just sell if the price goes beyond 3.30. It's good if you are 1 of the lucky guys who successfully subscribe ASTRO IPO, otherwise, try not consider to buy ASTRO at high price on the listing day, it is just a bit too high!



Note: The above content is just a blogging activity that purely share my investment thoughts & ideas and should not be used as recommendation to buy or sell any securities. I may already have position in the above securities. Any action that you take from the opinions or information of this blog is solely on your own responsibility. Please consult your investment advisor before you make any investment decision.

Real Estate Investment Trust (REIT) - An Interesting or Boring Investment?

How do you think when we are talking about REIT? Most of the people think that investing in REIT is slow and boring. It may be true, if you are those risk taker, impatient investor or wish to make some fast money in the market.

REIT is considered as defensive investment. The REITs price is actually very stable & its fluctuation is not much, no matter hos's the economy doing. Besides, REITs are generating very good distribution yield for this moment, ranging from 5%-7.5% per annual, which is quite encouraging if compare with FD. Performance wise, currently the REITs are performing very well, most of the prices shut up 10-20% year-to-date (YTD), compare to the KLCI Index which is just up about 7% YTD.

Why investing in REIT? REIT can be a flexible player in managing your portfolio structure. You may consider of buying REIT if you want to diversify your portfolio or lower the market risk exposure of your portfolio. Also, if you feel uncomfortable with the current market, eg. uncertainty of global economy, the up coming general election, you can park some of your money into REIT first, wait for good timing & prices, then you may cash out from REIT & buy back some good stocks.

On the other hand, if you wish to become a property owner & make some return by renting out your property, but you don't have enough money to buy a property, maybe you can consider of buying REIT, because both the concepts are almost the same. The main income of REIT is from rental collected from tenants. With the distribution policy of at least 90% payout, most of the rental goes into your pocket, and you don't need to bother of problems, like marketing to get tenants, renovation, etc.

I believe it is worth to hold some REITs due to its defensive nature & good distribution yield although REITs' performance is doing strong this year. AMFIRST, TWRREIT, ATRIUM, & ALAQAR are among the REITs that I like most.

Note: The above content is just a blogging activity that purely share my investment thoughts & ideas and should not be used as recommendation to buy or sell any securities. I may already have position in the above securities. Any action that you take from the opinions or information of this blog is solely on your own responsibility. Please consult your investment advisor before you make any investment decision.

AirAsia & Malindo - Now Everyone Can "Buy"?

Currently AirAsia share price shrink dramatically below RM 3 because of the setting up of a new low cost carrier, the Malindo Airways, in Malaysia. I'm not going to talk about the fundamentals of AirAsia, but, the market reaction on the news.

I think the market is over reacted on the news. Firstly, there is nothing doing wrong with AirAsia. AirAsia is still doing business well as usual & they are still the best choice for those who wants to travel around. Maybe you say Malindo Airways will bring in fierce competition with AirAsia, I say yes, but it would only happen after 9 months from now. Also, I don't think Fernandes would do nothing, just wait & see the Malindo to compete with AirAsia.

Competition always bring benefit for consumers. Anyway, Malindo still has a long journey to pass through if they want to fight with AirAsia. I will see AirAsia share price remains volatile in short term & stand back to RM3 level soon.

Note: The above content is just a blogging activity that purely share my investment thoughts & ideas and should not be used as recommendation to buy or sell any securities. I may already have position in the above securities. Any action that you take from the opinions or information of this blog is solely on your own responsibility. Please consult your investment advisor before you make any investment decision.

ASTRO IPO - Another A-K's Company Re-Lists

Astro Malaysia Holdings Berhad, once awhile listed in Bursa Malaysia, is going to enter the Bursa again, 2 years after privatised by Ananda Krishnan (AK). Not like the Astro All Asia Network last time, the new ASTRO listing just includes the operation in Malaysia. This would be the 3rd AK's company to relist in Bursa in 3 years, after MAXIS & ARMADA. With the offer price of RM 3.60 per share, ASTRO is valued at market cap of RM 18.7 billion upon listing.

Is ASTRO IPO good enough to be subscribed? ASTRO is offered at historical PE of 30x with the net earnings of RM 629.6 million last year. The borrowings of RM 3.66 billion is very high for ASTRO since the total asset of ASTRO is just standing around 5 billion as per 30 April 2012. Even ASTRO brands itself as a dividend yield player by promising to pay out at least 75% of the earnings as dividend to their shareholders, the dividend yield is around 2.5% (base on 75% payout ratio).

However, the market cap of RM 18.7 billion upon listing sounds a bit controversial since AK privatised Astro All Asia Network at RM 8.1 billion in 2010. Even the number of subscribers for ASTRO is still increasing, I believe the number will be growing slower in the next few years. The market share of ASTRO may be affected as well since TM is starting their paid TV business Hypp TV. While we can see the success of Unifi, I believe TM will become a strong challenger to ASTRO in the future.

I think the offer price of RM 3.60 for ASTRO is really, fully, valued already, I believe the fair value shouldn't be higher than RM 3.60 for this moment. Anyway, institutional & retail investors will still go for ASTRO because of its big name & the company size. AK's companies are always trading at premium, like MAXIS & ARMADA which traded over 10% of the IPO price upon listing. You still can try your luck to apply for ASTRO IPO on speculation that the price will trade at 10% premium on the 1st days ASTRO lists in the market. Why luck is important? Because they are going to offer 5% or 260 million shares to retail investors only.



Note: The above content is just a blogging activity that purely share my investment thoughts & ideas and should not be used as recommendation to buy or sell any securities. I may already have position in the above securities. Any action that you take from the opinions or information of this blog is solely on your own responsibility. Please consult your investment advisor before you make any investment decision.