COMMENTS ON MATANG BHD (0189)

FIGURE 1: MATANG BHD LAST 2 YEARS SHARE PRICE TREND

**analysis based on 2019 annual report.

1.       GENERAL INTRO: MATANG is one of the main oil palm plantations in Malaysia.

2.       NOTABLE POINTS:

a.       In 2019 report, main business segments include operation of oil palm plantations and sale of FFB (does not involve in milling).

b.      The Group is newly listed in Bursa Malaysia ACE Market since 2017

c.       The Group operates oil palm estates in Johor with a total planted area of 1,080 hectares and total annual fresh fruit bunches (FFB) production of 24,029 MT.

d.      In FY2019, reported lower revenue was due to decreasing FFB selling price.

e.      In future, the Group continues to consider and evaluate opportunities for expansion of its core business in oil palm plantation through acquisition of suitable and viable oil palm estates and/or land for development of new oil palm estates.

f.        In addition, the Group also intends to diversify its operations to include ownership, operation, and management of durian plantation, processing, production and distribution of durian, and any related downstream business activities

3.       IS THIS COUNTER A STRONG GROWTH STOCK? 

a.       REVENUE RANGE (RM million): 9.7 million as reported in 2019 annual report, this is a very low revenue company.

b.      SHARE PRICE: from 2018-2020, share price ranged from ~ RM0.06 to RM0.10.

c.       EARNING PER SHARE (EPS): earning per share in last 3 years fluctuated from 0.07 to 0.23 sen.

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 0.1 million, around 0.05% of total assets.

4.       IS THIS A STRONG DIVIDEND STOCK?     

a.       DIVIDEND YIELD: in 2019 financial year, MATANG declared a dividend payout of 0.15 sen per share to shareholders, which amounts to a dividend yield of 1.67%.

b.      DIVIDEND PAYOUT RATIO: Hence, in 2019 financial year, MATANG paid out 150% of its earnings to shareholders in the form of dividend.

c.       CONSISTENCY: the dividend payout was not consistent, the dividend paid to shareholders in the last three years ranged from 0 to 0.2 sen.

5.       IS THE MANAGEMENT PERFORMANCE GOOD?

a.       RETURN ON EQUITY (ROE): in 2019 financial year, MATANG reported a low return of shareholders’ equity, at 0.97%.

b.      COST-TO-INCOME RATIO: cost-to-income ratio is high, at 212%.

6.       OTHER INDICATORS:

a.       CASH FLOW: cash flow is positive but very low, around RM 39.1 million, equivalent to RM 0.02 per share.

b.      SUPPORT BY INSTITUTIONAL INVESTORS: this counter is not well supported by institutional investors, there are only 9 institutional investors at top 30 major shareholders list, not including insurance companies and investment funds. Its major shareholders is Huaren Holdings Sdn Bhd (11.48%).

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