MALINDO FEEDMILL - It's All About Chicken!

I think this is the first time I talk about foreign company in my blog. Malindo Feedmill is always my darling stock. This is an Indonesia's poultry company, which mainly produces chicken feed, day-old chicken (DOC) & chicken meat. Controlled by Malaysians, the Lau's family, Malindo Feedmill's major shareholder is Dragon Amity, which is under management of Leong Hup & Emivest, listed in Bursa once awhile & taken over by Emerging Glory 2 years ago, both are major poultry players in Malaysia.

Why Malindo Feedmill? Because of large potential market to be discovered! Just show you some funny fact. Statistics shows that Indonesia has the lowest chicken consumption per capita in the region.While Malaysian consumes 37.2kg/capita per year, Thailand 13.3kg, Philipine 8.4kg, Indonesian just consumes 5.0kg/capita 1 year. I don't think Indonesians will reach Malaysian's figure, but if we talk about 7.5kg/capita, it's 50% of increment!

Financial performance wise, Malindo Feedmill has been performing pretty strong this year. We can see their revenue has increased almost 30% & profit has surged over 40% compare to the same period last year. The ROE of Malindo Feedmill over 50% for the last 4 quarters. I believe that 40% of ROE shouldn't be a problem for them to achieve in FY13. Dividend wise, Malindo Feedmill is paying around 30% payout of their earnings as dividend.

The market capital of Malindo Feedmill is 3,051 billion IDR, which is around 4.7 times of its book value. I believe this is still reasonable because of its high ROE. The share price has surged to current price of IDR1,800, which is over 80% of increase compare to the price 1 year ago. Currently Malindo Feedmill is trading at PE of 9.5 times.

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.

WTK HOLDINGS - A Hopeful Quarter Result?

A lady asked my opinion on WTK Holdings Berhad few days ago, so I share my view on WTK here. WTK is controlled by Wong's family in Sarawak, i.e. Wong Kie Nai & Wong Kie Yik. The main business of WTK is manufacturing & trading timber logs and plywoods. Besides, WTK also manufactures & trades foils, tapes,electrostatic discharge products & develops palm oil plantation.

WTK was not doing well for the past 2 quarters in 2012, mainly due to the lower timber production, lower selling price on timber, and weak demand from its major importer, India. While its non-timber operation's performance is looking stable, its other operations suffer losses arising from an associate company. Its palm oil plantation is not generating significant revenue to the company as well. Currently it has 8,500 hectares of planted oil palm trees & is expected to contribute to the company significantly starting year 2014.

Anyway, we may expect the better up-coming quarter result from WTK, because of the increasing production of timber products as well as higher selling price of timber during the period. We can see the improving production from the data that have shown in Bursa, due to the better weather situation in Sarawak during July - September.

The share price of WTK has dropped 30% from its peak of RM1.50 level 7 months ago. The current price range of WTK is around RM1.00-1.05 while the book value per share is around RM2.81. The Wong's family started accumulating WTK's shares 6 months ago & they have purchased more than 2% of shares year-to-date. However, the country risk for WTK is high. More than 80% of their production are exported to India & Japan, that's why we see lower profit dropped significantly for the past 2 quarters when the India has lower demand on timber.



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.