COMMENTS ON TDM BHD (2054)

FIGURE 1: TDM BHD LAST 5 YEARS SHARE PRICE TREND

**analysis based on 2018 annual report.

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

2.       NOTABLE POINTS:

a.       In 2018 report, main business segments include operation of oil palm plantations, milling operations, and healthcare services.

b.      The Group operates 16 oil palm estates in Terengganu (Malaysia) and Kalimantan (Indonesia) with a total planted area of 43,991 hectares and total annual fresh fruit bunches (FFB) production of 375,295 MT.

c.       The group also operates 3 palm oil mill that has a combined capacity of 180 MT FFB per hour and produced 72,550 MT CPO in 2018. The reported average oil extraction rates (OER) is 19.32%.

d.      The Group also operates 3 bio-composting plants to convert empty fruit bunches (EFB) of oil palm into bioorganic fertiliser for use in its estates.

e.      The Group’s Healthcare division manages four specialist hospitals, which offer no-frills, affordably priced secondary healthcare care services to its local communities.

f.        The Group posted a lower Revenue and loss before tax of RM68.1 million in FY2018, due to depressed prices of CPO, one-off impairment charges related to its Kalimantan estate and foreign exchange losses from fixed income investments. The dip in revenue contribution by its plantation business was offset to a degree by higher revenue from the Healthcare Division, which achieved revenue of RM209.6 million, representing a 14.3% increase over RM183.4 million in FY2017.

3.       IS THIS COUNTER A STRONG GROWTH STOCK? 

a.       REVENUE RANGE (RM million): 404.7 million as reported in 2018 annual report, this is a medium revenue company.

b.      SHARE PRICE: from 2015-2019, share price has decreased from ~ RM0.70 to RM0.20, then increasing sharply to ~RM0.40 by January 2020, due to recent uptrending of CPO price.

c.       EARNING PER SHARE (EPS): earning per share in last 5 years fluctuated from -4.48 to 3.66 sen, making losses in 2 out of last 5 years.

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 30.6 million, around 1% of total assets.

4.       IS THIS A STRONG DIVIDEND STOCK?     

a.       DIVIDEND YIELD: in 2018 financial year, TDM did not declare a dividend payout to shareholders.

b.      DIVIDEND PAYOUT RATIO: N/A

c.       CONSISTENCY: the dividend payout was not consistent, the dividend paid to shareholders in the last five years ranged from 0 to 1.5 sen.

5.       IS THE MANAGEMENT PERFORMANCE GOOD?

a.       RETURN ON EQUITY (ROE): in 2018 financial year, TDM reported a very low return of shareholders’ equity, at -7.82%. Last five years ROE ranged from -7.82 to 4.14%.

b.      COST-TO-INCOME RATIO: N/A

6.       OTHER INDICATORS:

a.       CASH FLOW: cash flow is positive, around RM 38.2 million, equivalent to RM 0.02 per share.

b.      SUPPORT BY INSTITUTIONAL INVESTORS: this counter is moderately well supported by institutional investors, there are 15 institutional investors at top 30 major shareholders list, including KUMPULAN WANG PERSARAAN (DIPERBADANKAN) (2.78%) and few insurance companies and investment funds. Its major shareholders is Terengganu Incorporated Sdn Bhd (61.49%).

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