FIGURE 1: IOI CORPORATION BERHAD
LAST 2 YEARS SHARE PRICE TREND
**analysis
based on 2019 annual report.
1.
GENERAL INTRO: IOI is one of the main oil palm
plantations in Malaysia.
2.
NOTABLE POINTS:
a. from
2019 report, reported total planted area is 177,279 hectares (96 estates) and
15 palm oil mills with an annual milling capacity 4.6 million tonnes of FBB.
The whole operation is supported by a total workforce of >23,000 employees.
b. IOI
has 6 downstream manufacturing facilities with combined annual capacity of 1.8 million
MT and exporting to 80 countries worldwide
c. In
an effort to reduce greenhouse gas emissions and generate renewable energy, six
biogas power plants have been installed in the mills as at July 2019. Another
four biogas power plants are currently under construction, making a total of
ten.
d. The
Group has embarked on an estate mechanisation programme to improve productivity
and cost efficiency.
e. As
for the oleochemical division, the Group will commence construction of its new
110,000 MT capacity oleochemical plant in Prai, Penang by end of calendar year
2019. Construction of the plant is estimated to take two years to complete. A
new filling facility for pharmaceutical-grade liquid products was commissioned
at our specialty ester plant in Witten, Germany to meet higher quality
standards required by the pharmaceutical industry.
f.
In addition, a new formulation and
multifunctional CARE Studio for beauty care and cosmetic products was set up in
Hamburg, Germany to facilitate collaboration with customers and to enhance
product customisation.
3.
IS THIS COUNTER A STRONG GROWTH STOCK?
a. REVENUE
RANGE (million): ~7385.6 million in 2019 annual report, this is a high revenue
company.
b. SHARE
PRICE: from 2018-2019, share price remain steady at around RM4.50
c. EARNING
PER SHARE (EPS): earning per share in last 5 years fluctuated from 0.82 to 48.7sen
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 279.1
million, around 1% of total assets.
4.
IS THIS A STRONG DIVIDEND STOCK?
a. DIVIDEND
YIELD: in 2019 financial year, IOI declared a dividend payout of 8 sen per
share to shareholders. The dividend yield amounts to 1.66% only.
b. CONSISTENCY:
consistent dividend payout, last five years (2015-2019) dividends declared range
between 8 to 20.5 sen per share.
c. DIVIDEND
PAYOUT RATIO: in 2019 financial year, IOI paid out 79.6% of its earnings to
investors in the form of dividend.
5.
IS THE MANAGEMENT PERFORMANCE GOOD?
a. RETURN
ON EQUITY (ROE): in 2019 financial year, IOI achieved a low return of
shareholders’ equity, at 6.85%. The ROE in last five years ranged from 0.68 to 36.4%.
b. COST-TO-INCOME
RATIO: cost-to-income ratio is high at about 746%.
6.
OTHER INDICATORS:
a. CASH
FLOW: cash flow is positive, around RM 2598.6 million, equivalent to RM 0.41
per share
b.
SUPPORT BY INSTITUTIONAL INVESTORS: this counter
is very well supported by institutional investors, there are 29 institutional
investors at top 30 major shareholders list, including EPF (12.49%), PERMODALAN
NASIONAL BERHAD (0.55%), SKIM AMANAH SAHAM BUMIPUTERA (4.72%), KUMPULAN WANG PERSARAAN
(2.99%), PROGRESSIVE HOLDINGS SDN BHD (47.73%) insurance companies and
investment funds.
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