Sunday, December 4, 2011

TDM.....Fair is fair

I think Badawi is a cleaner among the dirtiest shirts. The GLC transformation that he started in 2004 did bear some fruits. Some of the results were visible in 2007 and 2008. I believe it was too late for him because people ran of patience and could vote for anybody as long as it was not a blue colour. It was that desperate if you could recall. When Najib took over the ruling government after the aftermath, 'till today, I think hapak pun tadak nampak.

Don’t get me wrong. I’m not running a goodwill campaign for the present government but I felt that no matter who they are, when they did a good job, just give them the credit. Pak-lah did something and TDM is his witness today.

Don’t count on the present ruling government, they have good experience of running the country but their superlative corruption experience is also easily one of the top notches in the world. Net of that equals to going no where if not backward! I could recall one of Guan Eng’s speeches that sound something like this: yes we have no experience to run the country but neither have we had the experience to corrupt. Well said Guan Eng. Net of that equals to progress.

A clean officer who refused to participate in an en-mass graft sharing program will certainly be murdered brutally, so don’t count on the old system. We need an alternate new system. Don't expect the final product will look different if it's coming out from the same mold.

Back to money matters, TDM indeed is a very undervalued stock. This company started their journey to reform in 2004 under Badawi's GLC reformation initiative. The first thing that you may notice from the below table is --- their yields were below the industry efficient players which is around 20 MT/hectare.

The yields, as you can see, were certainly crawling upward after they put in more efforts to improve their productivity, replanting, better fertilizing program and etc.

Luck was on their side too, rising commodity price lifted the CPO price. When the twin-turbo(rising CPO price and rising FFB(due to productivity improvement)) is super-charging, any idiot also can make a conclusion that this is a no brainer stock to buy.

I believe Mr. Koon Yew Yin thinks this stock is so undervalued that he does not want to stir the market when he was accumulating. How do I know? I deduced this by looking at how he bought this stock. His public records revealed that he bought through 4 stock brokers. 4 brokers? Yes, using 4 brokers to accumulate speak volume of his convictions. No need to prove beyond reasonable doubt.

OSK 894,400 shares
TA 599,400 shares
HLG 593,000 shares
Maybank 445,800 shares

TDM has a plan to have 40,000 hectares presence in Indonesia. You can sense what they said will come true because they already acquired 25,000 hectares. And by 2014, these 25,000 hectares will be fully planted. If CPO prices stay between 2,500 - 3,000/MT, they can easily double their earnings in the next 7 - 10 years. TDM is currently managing 12 palm oil estates with about 33 k hectares planted.

Disclosure: None.

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