Sunday, August 22, 2021

Bought United Plantations (KLSE)

Bought a 5% position in United Plantations (on the KLSE), an efficient Malaysian Palm oil producer.

Its a steady, boring dividend payer.  Their cashflows generated cover their dividends and capex.  They should do well if CPO prices rise in an inflationary environment.  Last year, they paid 85 sen dividends at a 90% payout ratio with an ASP of RM 2613.

For their 1H results

  • Revenue increased 43%, but costs were up 66%, mainly due to a labour crunch in importing foreign workers.  PAT was up 3%.
  • The refinery segment took a ~30m hedging loss, which should be reversed upon delivery of goods in the coming quarters.  Around 3 sen per share.

The biggest risk is if covid is detected in their operations, they may have to stop them.

Unlike REITS, they are debt free, so will not be affected by rising interest rates.

This idea was from Asian Century Stocks (paid link)

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