FIGURE 1: KUALA LUMPUR
KEPONG BERHAD LAST 2 YEARS SHARE PRICE TREND
**analysis
based on 2018 annual report.
1.
GENERAL INTRO: KLK is one of the main oil palm
plantations in Malaysia.
2.
NOTABLE POINTS:
a. according
to 2018 report, KLK has plantations in Malaysia, Indonesia and Liberia (total
225617 hectares) and has manufacturing plants in Malaysia, China, Indonesia,
Switzerland, Belgium, Germany, the Netherlands as well as property development
operations in Malaysia
b. KLK
owns 24 palm oil mills with capacity range from 20-120 MT/hour to produce crude
palm oil (CPO), as well as 4 refineries which process CPO into higher value
products, it also has three plants to process palm kernels
c. it
has 6 power generating biogas plants which convert some of the wastes from the
palm oil mills to electricity
d. also,
its rubber business, while constituting only 5% of the planted area, remains
important to the plant operations.
3.
IS THIS COUNTER A STRONG GROWTH STOCK?
a. REVENUE
RANGE (million): ~18400 million in 2018 annual report, this is a high revenue
company.
b. SHARE
PRICE: from 2018-2019, share price share price steady at around RM24.00 to
around RM25.00
c. EARNING
PER SHARE (EPS): earning per share in last 5 years decreased from 93.1 to 70.1sen
d. FUTURE
POTENTIAL/PROSPECTS: quite dependable and reliable counter, share price expected
to be stable.
e. CAPITAL
EXPENDITURE (CAPEX): spending on purchase of new fixed assets is RM 472.6
million, around 2% of total assets.
4.
IS THIS A STRONG DIVIDEND STOCK?
a. DIVIDEND
YIELD: in 2018 report, KLK declared a total dividend payout of 45 sen per
share, amounts to dividend yield of 1.82 % based on current share price.
b. CONSISTENCY:
consistent dividend payout, last five years (2015-2019) dividends declared range
between 45 to 55 sen per share.
c. DIVIDEND
PAYOUT RATIO: in 2018 financial year, KLK paid out about 63.6% of its earnings
to investors in the form of dividend. The dividend payout ratio range from 30-60%
of earnings in last five years.
5.
IS THE MANAGEMENT PERFORMANCE GOOD?
a. RETURN
ON EQUITY (ROE): in 2018 financial year, KLK achieved a low return of
shareholders’ equity, at 6.6%. Last five years ROE range from 6 to 15%.
b. COST-TO-INCOME
RATIO: cost-to-income ratio is high at about 1547%.
6.
OTHER INDICATORS:
a. CASH
FLOW: cash flow is positive, around RM 1188.3 million, equivalent to RM 1.12
per share
b.
SUPPORT BY INSTITUTIONAL INVESTORS: this counter
is very well supported by institutional investors, there are 30 institutional
investors at top 30 major shareholders list, including EPF (11.64%), SKIM
AMANAH SAHAM MALAYSIA (1.04%), FELDA (3.57%), BATU KAWAN BHD (47.03%), SOCSO (0.27%),
insurance companies and investment funds.
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