Reasons why some Plantation Companies will not perform 3rd Qtr. 2010/11

Rocky

Rocky

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You may have some good reasons, these are mine:

-Good transfer pricing formulas (between manufacturer and Holding Company)
-Shifting of profits to Holding Company (Siphoning of funds)
-Avoidance of paying higher wages by manufacturer (Union Issues)
-Tax avoidance (Differed taxation)[/list]
-Improving the tax payout (Cash Flow management)

Please add yours.
So there may be mixed results this qtr due to management joining the brokers, traders, experts in the manipulation process. Correct me anyone!!

Last edited by Quibit on Thu Feb 03, 2011 12:01 pm; edited 2 times in total (Reason for editing : format condensed)

salt

salt

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hybrid_OS wrote:You may have some good reasons, these are mine:

Please add yours.
So there may be mixed results this qtr due to management joining the brokers, traders, experts in the manipulation process. Correct me anyone!!

Can you elaborate on this?

You mean to say that Plantation companies are pushed by brokers and manager collectively without seeing meaningful results justify the movement?

Quite possible? Can anyone tell us whats your view and assessment on MASK profitability in the coming quarter? They are mainly on Tea. Will the records an attractive profits and how?

Slstock

Slstock

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salt wrote:

hybrid_OS wrote:You may have some good reasons, these are mine:

Please add yours.
So there may be mixed results this qtr due to management joining the brokers, traders, experts in the manipulation process. Correct me anyone!!

Can you elaborate on this?

You mean to say that Plantation companies are pushed by brokers and manager collectively without seeing meaningful results justify the movement?

Quite possible? Can anyone tell us whats your view and assessment on MASK profitability in the coming quarter? They are mainly on Tea. Will the records an attractive profits and how?

Yes, plantation are naturally subject to external influences: weather , world prices, government policies etc. Hence they are naturally volatile. As we all know Rubber based Plantation seems to be having the edge due to escalating rubber prices. So in the preset market, picking Plantation at random will not be the best option.Totally Tea based plantation will not give you good return expect in speculative upward movement. We need to study and analyse their growth potential if we pick a plantation for medium to long term.

Even if the wage issues hit , if they had done a reasonable wage revision last time and the company is treating their employees correctly they should be able to negotiate a better deal which will not harm the company's profit too much.

Out of the lot one of the best managed plantations appears to be KGAL. Their last 3 quarter growth has been very good and a better quarter can be expected in Dec if no surprises. I am not a making buy recommendation. I also hold some shares.

upuldi

upuldi

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remember what happened to bala and mal in earlier quarter ....

Slstock

Slstock

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AM just sharing an observation and discussion on Plantation market sentiments which will be useful to new comers. This is not a Buy recommendation.

Best example is MAL.
They had a 6 month EPS of 13. There was so much expectation that prices will go up due to fundamental so far. It was then the most undervalued.
Sept quarter they did not do super ( due to lower Tea prices along with most other plantations except for ones which had higher rubber. Note that MAL also had decent Rubber but their Tea dragged their profit down) and market did not like that.
Still their 9 Month EPS is well over RS 14. Even with only a 9 month EPS of 14 and a PE of 8 it should be trading at 112 now. With expected annualized EPS of Rs 20 and PE of 8 it should be trading over Rs 150 ( today price around Rs 98).
When the exceptional performances they had shown in the last 2 quarter did not come in the 3rd, prices started coming down unrealistically. At one point a Rs14 Eps company was selling at Rs 65-70 ! So investor sentiments also counts as people panic. Though the off quarter performance was not that great their overall for the year so far was superior as you would note.

If you look at companies like KOTA with a 6 Month EPS of 8 it is now trading at over RS 170 due to future expectation as it is comparatively rubber heavy. Their PE is much higher than MAL is you do the math.

AGAL with a 9 month EPS of 3.18 is trading around Rs 80-90. This is due to future expectations as it is comparatively rubber heavy( oild palm too).

So in Summary at CSE when considering Plantations, more than quartely earnings, future growth potential is what market looks at in the medium term. Short term there will be spikes as we recently saw on sentiments and expectations.

So new comers be vigilant when pick Plantations as not only current performace but future growth also matters if you are planning for medium to long term investment.

This is not a BUY or Sell for MAL,KOTA or AGAL. Just trying to drive a point. Having said that if you analyze carefully and invest plantation can bring you fortunes.

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Reasons why some Plantation Companies will not perform 3rd Qtr. 2010/11

1 Reasons why some Plantation Companies will not perform 3rd Qtr. 2010/11 Wed Feb 02, 2011 7:22 pm

Rocky

2 Re: Reasons why some Plantation Companies will not perform 3rd Qtr. 2010/11 Wed Feb 02, 2011 10:17 pm

salt

3 Re: Reasons why some Plantation Companies will not perform 3rd Qtr. 2010/11 Thu Feb 03, 2011 8:08 am

Slstock

4 Re: Reasons why some Plantation Companies will not perform 3rd Qtr. 2010/11 Thu Feb 03, 2011 8:12 am

upuldi

5 Re: Reasons why some Plantation Companies will not perform 3rd Qtr. 2010/11 Thu Feb 03, 2011 8:53 am

Slstock

6 Re: Reasons why some Plantation Companies will not perform 3rd Qtr. 2010/11

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