Pinehill Pacific

There is no doubt by now that PinePac is forming its sub-wave iii of wave (iii) of mega wave (3). It opened with a gap last Friday with high volume. Today, it went to as high as 41 sens before taking a breather.

Its earning for its last quarter ending 30th June is 0.66 sen and NTA is Rm 1.48. It has 3,587 hectares of oil palm plantation in Hilir Perak and 40,180 hectares in Indonesia. Total planted area is 10,958 hectares.

For its 3,587 hectares of plantation in Perak, the book value is only 13 sen psf. If I use 70 sen psf to value the plantation land, its NTA will improve to Rm 2.93. For its 40,180 hectares of land in Indonesia, PinePac paid less than Rm250 a hectare.

For the plantation stocks, I have worked out a number for 'Planted area per million shares per share price'. This is to check for every one Rm I paid for the stock, how many hectares of oil palm plantation is there for every million shares of the stock.

PinePac ranked No.1 with 187 ha per million shares per Rm. At the bottom is United Plantation, KLK and IOI with 9, 8 and 6 respectively, ha per million shares per Rm. They are fully valued.

According to PinePac's 2012 annual report, by June 2014, another 8 months from now, its planted area will be increased by another 20,000 hectares. With this additional 20,000 hectares, the figure for 'ha per million shares per Rm' will jump from 187 to 529.

So theoretically, in the future, 5 to 10 years down the road, when Pine Pac's plantation are fully matured and if the company can improve their plantation management skill to the level of KLK, PinePac's stock price needs to go to Rm 20 to bring the number from 529 to 10. Rm 20, am I dreaming ?

If they have the matured oil palm area and if they can get more than 20 tons of FFB per hectare a year and if CPO price is good, with proper management, why not ? Unless they siphon off the FFB and profit to somewhere else.

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