Pinehill Pacific Bhd (Rm0.28)

On 21 September 2018 Pinepac announced its proposed disposal of all its plantation assets in Perak of 8,999.13 acres to United Plantation Bhd for a total cash consideration of Rm413,574,302.49.

Within 2 days after the announcement, its share price went from a low of 14 sens to an intraday high of 69 sens. After the initial euphoria, Pinepac started to consolidate in a side-way movement for more than a year. Technically there is a possibility that it has completed its major wave 2 consolidation.

On 3 September 2019, Pinepac announced the completion of the disposal following the payment of the Balance Purchase Price by the purchaser and the transfer and registration of the title deeds for the plantation assets in the name of the purchaser.

But upon the completion of the S&P, Pinepac automatically becomes a PN17 company because it had disposed off its main business that contributed more than 90% to its revenue. Pinepac has to submit a Regularisation Plan within a year to the SC for approval on its new business plan.

Since Pinepac has received all its Rm413.57 million by 3 September 2019, this sum will have to be reflected in its coming quarterly earning that it must announce before end of this month (November).

From its previous annual report, the book value of the assets was Rm240.05 million. The surplus over the book value is Rm173.52 million and it has to be reflected as earning for the quarter. If I divide Rm173.52 million by its number of share of 149.8 million, I get Rm1.15 per share.

Before end of this month, for quarter ending 30/9/2019, is Pinepac going to announce an earning of Rm1.15 a share and with its net assets per share improved to Rm1.58 from Rm0.43?

I am not trained in accounting, as a layman, what I have done is a simple 1+1=2 kind of things. I have to wait for the coming Pinepac announcement to see how good or how bad is my computation.

If I less all its liability (borrowing, taxes, amount payable and amount due to its Directors) of Rm293.12 million from the cash that it received Rm413.57 million, the balance of cash is Rm120.45. Divided by its total number of shares of 149.8 million, net cash per share is Rm0.80.

My simple thinking is - If I buy this stock, I am actually paying 28 sens a share for 80 sens cash per share plus a company that still has 51,400 acres of leasehold land (60-year lease) in Indonesia that consists of 22,100 acres of matured oil palm.

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