Thursday, December 27, 2012

Tradewinds Plantation may have been cornered

This is the upmost top financial blog in Malaysia - To spend real time and consistently update on a daily basis, it has gained my upmost respect. And to have a respected figure, Mr Koon (one of the pioneers of IJM) to contribute it must be something. If you notice my post before, I have much respect for IJM before and now. In fact, IJM was one of my earlier investments. IJM is an epitome of a great construction company in Malaysia that has worked its way through a tough industry being straight and clean.

In a recent article, Mr Koon Yew Yin caused people who followed him in buying Tradewinds to profit as it is trading close to RM9.00 now.

Today, however - there is a reiteration of Tradewinds Plantation (TWSP) to be way undervalued. Based on underlying asset value, there is no doubt about it. Sometimes though, it may not be in the asset value. We are holding stocks in a company controlled by one of the shrewdest businessman in Malaysia. Currently the group among Tradewinds (the parent) already hold 73.70% of TWSP. Just to highlight some of the most recent numbers which I can find.

92 holders control 95.84% (16.27% + 79.57%) of Tradewinds Plantation. This is almost unprecedented. Another stats below:

Part of First page of Top 30. Top 6 holding almost 90%
How much does the Top 30 hold?

Part of Top 30

The Top 30 hold 93.71% of TWSP. To invoke a compulsory acquisition of RM4.03 per share of TWSP (from mandatory), it needs to achieve 90% threshold which I think is not too difficult. In fact, if you search further EPF has sold to below 5% sometime around July this year. It could mean the insiders were buying up the EPF's portion.

I think this stock is already cornered. Tradewinds the parent is being offered at price probably below its substantial Net Asset Value. TWSP is to be bought at way below its real value and there is not much we can do about it. Another thing in TWSP we noticed, it is very loosely traded now which means probably the more than 90% have already gone to hibernation while waiting for the Tradewinds exercise to be completed - then only a matter of time before the full acquisition of TWSP to be completed. Even if TWSP may have much higher underlying value, it is probably tough for us to get to enjoy that.

The reason I am posting this is to allow some investors be aware - I think this is important enough for some to know. I may be wrong - there's no harm in highlighting.

Wanted to highlight in S Dali's blog but this is too much to highlight in the comment section.


newbie said...

Only come across your blog today.Boy,have I missed out on lots of things!!Good of you to highlight the unobvious.A lot of people would have bought simply because Mr Koon said to do so.Keep it up!!

Yau said...

Hi Felicity, any idea/guess why is Mr Koon still keeping TWSP as a major part of his Portfolio. What is the advantage /rationale?

felicity said...

I think it is the obvious, which is value investing - buy undervalued stocks. TWSP is undervalued definitely.

A believer of value I am, however I have also been wary of market play which exist in almost all stocks.

Anyway, As mentioned what I propagate may not be true but I usually suspect holdings that have few very large shareholders and prices are either kept artificially low or high. Again I may not be right.

Yau said...

Thanks for sharing your opinion.