UNITED PLANTATION (2089)

 

Business sector: plantation

-carry out plantation operation with several downstream refinery

Unitata is in the refining business of palm oil and palm kernel oil with an emphasis on
specialty fats for the chocolate industry, whereas Unifuji is a refinery with an emphasis on solvent fractionation of palm oil.

 

Stock information(based on last share price on 1/7/2022):

Number of share :416mil

Share price :RM13.98

Market capital :5819 mil

Net cash company

-borrowing :0

-cash and equivalent :222.5 mil

 

Area	2018	2019	2020	2021	2022
Mature	38,661	42,008	42,636	42,789	awaiting
Immature	4,674	4,723	4,009	3,732	more
CPO yield	5.71	5.70	5.93	5.99	information

 UP officially took over the management of Pinehill Estates 3,642 Hectares with RM 401million on 17 Aug 2019.

Revenue and PAT (million)

	2018	2019	2020	2021	2022 (YTD)
Revenue	1305	1173	1340	2033	642
PAT	374	284	402	522	59.7

 

Breakdown of profit (PBT)

	2018	2019	2020	2021	2022 (YTD)
Plantation	396	256	428	624	169
Refinery	73	71	51.8	53	-91

Plantation: Profit increases as ASP increases.

ASP	2018	2019	2020	2021	2022 (YTD)
CPO (UTDPLT)	2606	2356	2613	3309	3798
CPO (MPOB)	2233	2079	2686	4407	~6000
PK (UTDPLT)	1992	1312	1594	2168	2992
PK (MPOB)	1828	1214	1532	2773	~5000

*CPO: crude palm oil, PK: palm kelnel, MPOB:Malaysian Palm Oil Board

As United Plantation adopted forward sale policy (upto maximum 2 years). Hence, the ASP will be lower on a rising market and will be higher in a falling market.

About 30-70% of CPO was sold forward.

Refinery- “This segment recorded a loss before tax of RM91.0 million in the current quarter as compared to a profit before tax of RM30.3 million in the preceding quarter. The profit before tax for the current quarter decreased by 400.0% as compared to the preceding quarter mainly due to hedging losses realised through buy backs of earlier sold BMD CPO futures will be reversed through higher contribution in the coming quarters in a similar manner as last year as the delivery of finished goods are sold at current market prices but produced with significantly lower raw material prices (CPO) purchased earlier in connection with UP’s forward sales. Nevertheless, due to the large inverse in prices between the spot and future month contracts, contribution has been reduced somewhat. The current refinery results are not reflective of the underlying business and it is expected that the results of this segment for the full year will be better than 2021.” as written in latest QR.”

 

Revenue contribution (RM million)

	Malaysia	Indonesia	Europe
Revenue	1056	197	414

Revenue from one major customer amounted to RM1,009,625,000 (2020: RM653,752,000), arising from sales by the palm oil refining segment.

*top 3 clients are from European market.

Indonesia palm oils (for Utd Plt) were sold locally in Indonesia.

 

Latest land purchase:

On the 17th of August 2019, UP officially took over the management of Pinehill Estates 3,642 Hectares with RM 401million.

Replanting program expected completed on Mid 2022.

Dividen policy

70-80%PAT plus minus special dividen

 

Risks to business

1. Rising fertiliser cost

- https://www.dtnpf.com/agriculture/web/ag/crops/article/2022/06/08/fertilizer-prices-move-lower-first#:~:text=DAP%20had%20an%20average%20price%20of%20%241%2C056%2Fton%2C%20MAP,of%20%24633%2Fton%20and%20UAN32%20%24731%2Fton%20%28all-time%20high%20price%29.

2. Labour shortage and increment of labour costs

https://www.straitstimes.com/asia/se-asia/fertiliser-and-worker-shortages-to-curb-malaysia-palm-oil-output

3. European policy on palm oil (palm oil ban)

https://www.astra-agro.co.id/en/2021/08/22/why-the-eu-should-lift-its-ban-on-asean-palm-oil/#:~:text=In%20December%202018%2C%20the%20European%20Union%20%28EU%29%20revised,contributes%20to%20extensive%20deforestation%20in%20Indonesia%20and%20Malaysia.

4. Cyclical business (depending on palm oil price)- based on history

https://tradingeconomics.com/commodity/palm-oil#:~:text=The%20Palm%20oil%20prices%20displayed%20in%20Trading%20Economics,data%20and%20disclaims%20any%20obligation%20to%20do%20so.

 

Strength

1. Most efficient planter (highest CPO yield/Ha)

2. Have both upstream and downstream business

 

Comparison of CPO yield/Ha and landbank of plantation companies (based on latest share price on 24/6/2022)

	Market Capital	FFB/HA	OER	CPO YIELD/HA	LANDBANK (Ha)
SIMEPLT	19184	18.49	21.95	4.05	579,708
IOICORP	24134	20.78	21.39	4.44	178,105
KLK	23879	17-23.5	21.75	4.66	350,000
BKAWAN	9944
UTDPLT	5952	25-28	23-25.5	5.99	62,980
FGV	5691				438,885
GENP	5245	17.1	21.8	3.72	116,829
SOP	2510	15.23	20.1	3.06	63,261
FAREAST	2134	17.01	19	3.23	18,791
TAANN	1882				50,000
BPLANT	1859	13.3	21.2	2.82	98,200
HSPLATN	1855
KMLOONG	1549	20.59	21.04	4.33	16,922
TSH	1491	22.7			42,495
KRETAM	1221	17.71	19.82	3.51	20,152
UMCCA	1118	15.5	19.1-21.3	3.1	48,554
BLDPLNT	843				40,242
CHINTEK	805	19.29	19.12	3.68	10,963
INNO	673	20.46	20.28	4.14	22,763
JTIASA	603				83,483
SWKPLNT	560	15.7	19.69	3.09	43,481
THPLANT	529	13.36	19.71	2.63	98,221
TDM	378		19.14		44,090
PLS	371				12,346
DUTALND	279
NSOP	259	17.73	18.08	3.2	7,174
HARNLEN	255	4.9	19.9	0.97	17,091
KLUANG	253	16			1,597
RSAWIT	248	4.89	19.69	0.96	69,909
CEPAT	242	16.27	20.03	3.25	10,820
RVIEW	230	25.59			2560
MATANG	228	19.19			1094.15
NPC	224	12.35	21.32	2.63	55,840
SBAGAN	223	17			4,928
MHC	178	15.8	19.68	3.10	11,177
INCKEN	176
GOPENG	173	11.95			1,414
SHCHAN	106				10,940
GLBHD	86
MALPAC	84
AASIA	72	16			4,019
PINEPAC	51	0.3			8,008

 

*some plantation companies OER, CPO/Ha yield were not written due to predominant focus on upstream sector or limited information in latest AR (or I might have missed it from AR) or the companies have diversified business.

 

Higher CPO yield/Ha would mean it is more efficient planter compared to other.