Thursday, January 17, 2013

Koon Yew Yin's update on Tradewinds Plantation

I have received an email with the below message from Koon Yew Yin. Previously, I have written a piece entitled, "Tradewinds Plantation may have been cornered". I feel that since I have written that piece, would be good to allow variety of opinions although it may not have been mine.

Basically, I feel that the current situation for TWSP is the question on probability that it will be privatised and if it is at current price of RM4.06 - RM4.07, your loss would be 3 - 4 sen and the trading commissions that comes with it. Additional loss if it is privatised at RM4.03 is of course opportunity costs. TWSP is definitely trading at a discount to its revised book value as provided by analyst - not me. However, I can see that there are quite a bit of plantation land not revalued.

I am of course not able to know for sure what would happen to the stock but I can see that at least 83% are for sure under Syed Mokhtar and parties related to him.


The safest & best opportunity to make money I know
Koon Yew Yin
16th Jan 2013

On 24th Dec 2012 the controlling shareholders announced that they wanted to buy up all the outstanding shares of TWS and TWSP that they did not own, at Rm 9.30 and Rm 4.03 per share respectively.
On 12th Oct I wrote an article “The most undervalued stocks I know” which was posted on Malaysia Finance Blogspot and KC Lau website when TWS’s price was Rm 6.40 and TWSP was Rm 4.00. TWS and TWSP closed at Rm 9.07 and Rm 4.06 respectively.  Those who bought TWS should be laughing but those who bought TWSP are disappointed because the prospect seems so hopeless.

Since the announcement of take over, I have bought up most of the shares traded. In my opinion, I have never felt safer and better in making money before than now in buying TWSP at Rm 4.06 per share because your potential lost is limited to 3 cents per share if they actually have the right to force you to sell at Rm 4.03. But the potential gain can be a few Ringgit per share.  

Although according to the takeover & merger code, the controlling shareholders can force you to sell at the offered price if they have acquired more than 90% of the total issued shares. But under the same code, any dissenting shareholder can protest and the civil court will have to hear the complaint and pass a fair judgement.  

In March 2012 an analyst from UOB KH wrote an article on TWSP when its share price was Rm 4,80. He had a target price of Rm 7.20. In his opinion the RNAV of TWSP was Rm 19.56 per share and CAGR for FFB production is about 13% for the next 3 years because most of their palms are young. The industry average is between 5-8%.   

Although they have sent out the official offer to buy up TWS on 14th Jan, they have not sent out the official offer to buy up TWSP. I think they could not find an independent adviser to support their offer. I also think it is most likely that they will raise the offer price to about half of the RNAV ie about Rm 10.

I believe this is the safest and best opportunity to own TWSP to make money because the downside is so small while the potential gain is so great.

I am obliged to tell you that my holding of TWSP forms a significant part of my share investment portfolio.

Koon Yew Yin   


Justin said...


Mr Koon might have already accumulated close to enough stake to block SM from taking private, if not he would not have came out with this article. Would fortune favour the bold?

felicity said...

HI Justin

I actually do not know, but like this morning it has gone up - the higher it goes the odds reduces as you need to pay more to take the bet that major shareholder does not privatise the company.

Gark said...

The same thing happen during the Glenealy plantation privatization offer. Shareholders tried to scuttle the deal by having a civil court case.

In the end Glenealy gave a small special dividend and the deal went through.

How to fight with the big boys?

felicity said...

I wrote the Glenealy article once before.