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shrobin said...

MKH Valuation:

MKH's main business is still in property development. The plantation business is on the ramping up phase. Planting started in 2008 and completed in 2011. I have lumped the property investment, trading and manufacturing under the category "others".

By 2016, I expect the 15,000 hectares plantation to yield about 5 tons of CPO per hectare. That is about 75,000 tons of CPO. At current CPO price of 2,300 per ton, it is still reasonable to expect a margin of 1,000 ringgit per ton. ( Reference to United Plantation production cost is about 750 ringgit per ton in 2012 annual report)

PAT = PBT x 0.75
= 75,000 x 1,000 x 0.75
= about 56 millions

MKH's share base: about 349 million shares

EPS = 56/349 = about 16 cent/share

At 15 times PE, it is worth about 2.40 (just the plantation business)

The property development business is doing about 100 millions per quarter. Assuming the same number for 2016 with margin of 21%.

PBT = 4x100x0.21 = 84 millions
PAT = 84x0.75 = 63 millions
EPS = 63/349 = about 18 cent/share

At 7 times PE, it is worth about a dollar twenty.

Finally, the category I lumped as "others". If you see 2012 and 2013 segmental report, it is yielding about 30 millions PBT. PAT is about 22.5 millions. EPS about 6 cent/share. I have placed a fare value of 10 times PE. So, it is worth about 60 cent/share.

So, share price should worth about (2.40+1.20+0.60= 4.20) by 2016. Current share price is about 2.60. About 60% upside over 3 years. A potential 17% annual compounding rate.

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