FIGURE 1: FAR EAST
HOLDINGS BERHAD LAST 2 YEARS SHARE PRICE TREND
**analysis
based on 2018 annual report.
1.
GENERAL INTRO: FAR EAST is one of the main oil
palm plantations in Malaysia.
2.
NOTABLE POINTS:
a. In
2018 report, main business segments include oil palm plantations and milling
b. the
Group owns 11 estates in Pahang with
total planted area of 16,140 hectares, and two mills that processed 433,030 MT
of fresh fruit bunches (FFB) in the current financial year.
c. lower
profit posted in 2018 financial year compared to 2017 financial year due to
lower FFB production, lower crude palm oil (CPO) prices and higher operation
costs
3.
IS THIS COUNTER A STRONG GROWTH STOCK?
a. REVENUE
RANGE (million): ~379 million in 2018 annual report, this is a medium revenue
company.
b. SHARE
PRICE: from 2018-2019, share price steady at around RM10.00, in Aug 2018 abruptly
dropped to around RM2.50 due to stock splitting and bonus issue
c. EARNING
PER SHARE (EPS): earning per share in last 5 years fluctuated from 19.39 to 85.5sen
d. FUTURE
POTENTIAL/PROSPECTS: share price expect to be stable in the next few years
e. CAPITAL
EXPENDITURE (CAPEX): spending on purchase of new fixed assets is RM 127.8
million, around 10% of total assets.
4.
IS THIS A STRONG DIVIDEND STOCK?
a. DIVIDEND
YIELD: in 2018 financial year, FAR EAST declared a dividend payout of 3 sen per
share to shareholders. The dividend yield amounts to 1.14% only.
b. CONSISTENCY:
consistent dividend payout, last five years (2015-2019) dividends declared range
between 3 to 35 sen per share.
c. DIVIDEND
PAYOUT RATIO: FAR EAST paid out around 15% of its earnings to shareholders in the
form of dividends in the current financial year. Last five years dividend payout
ratio ranged from 15 to 50%.
5.
IS THE MANAGEMENT PERFORMANCE GOOD?
a. RETURN
ON EQUITY (ROE): in 2018 financial year, FAR EAST achieved a low return of
shareholders’ equity, at 7.61%. Last five years ROE ranged from 7.61 to 16.03%.
b. COST-TO-INCOME
RATIO: cost-to-income ratio is high at about 358%.
6.
OTHER INDICATORS:
a. CASH
FLOW: cash flow is positive, around RM 34.7 million, equivalent to RM 0.06 per
share
b.
SUPPORT BY INSTITUTIONAL INVESTORS: this counter
is not well supported by institutional investors, there are only 15 institutional
investors at top 30 major shareholders list, not including insurance companies and
investment funds. Its major shareholders are LEMBAGA KEMAJUAN PERUSAHAAN
PERTANIAN NEGERI PAHANG (25.18%) and PROSPER TRADING SDN BHD (23.73%).
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