MHC Plantations Bhd (+ve)

MHC Plantations Bhd ( Fundamental: 0.7/3 Valuation: 2.4/3) is principally engaged in cultivation of oil palm and milling, the latter housed under a 38.1% subsidiary (CepatWawasan Group) acquired in 2013. 

Following the acquisition, the company’s revenue increased ten-fold, from RM28 mil in 2012 to RM272.56 mil in 2013. Its recent 4Q2014 results saw revenue increase 18.6% to RM323 million, while net profit was up 13.9% to RM14.23 million. This was due to better plantation earnings on the back of higher FFB volume and prices. Margin for the milling business was affected by competition for FFB. 

Aside from plantations, MHC commissioned its 12MW biomass power plant in 4Q14. The unit made an operating loss of 5.4 million last year, attributed to startup losses. 

MHC remains one of the cheaper stocks in the sector, trading at a 12-month trailing P/E ratio of just 13.75 times and 0.48 times book.

This article first appeared in The Edge Financial Daily, on March 3, 2015.