Hap Seng Consolidated Berhad

Solid Production to Lift Hap Seng Plantations’ Earnings

While Hap Seng Plantations Holdings Bhd is expected to post a seasonally weaker performance in the first quarter of this year (1Q25), the group’s full-year earnings outlook remains positive, underpinned by stronger fresh fruit bunch (FFB) output and higher crude palm oil (CPO) prices, analysts say.

UOB Kay Hian Research (UOBKH Research) has raised its earnings forecasts for the plantation company for this year and next by 28% and 61%, respectively, on the back of higher FFB production growth of 9% from 3% previously, while maintaining its projected average CPO selling average selling price at RM4,500 per tonne.

“We forecast the company’s net profit this year to increase by 7.1% year-on-year (y-o-y), driven by the higher FFB output of 6.6% as well as the higher projected average CPO prices of RM4,500 per tonne versus RM4,200 per tonne last year,” the research house said in.

For 1Q25, UOBKH Research projected that Hap Seng Plantations’ earnings will decline 35% quarter-on-quarter to RM54mil, largely due to seasonally lower production as estates were affected by flooding and a high price base in 4Q24.

“Based on its 1Q25 data, Hap Seng Plantations recorded a 11% y-o-y decline in production growth, due to lower output in January and February,” the research house said.

However, for the whole of this year, the research house said Hap Seng Plantations anticipates favourable production growth of 10% compared with its slightly lower forecast of 9%, driven by incremental contributions from its maturing palms.

“We note that the company continues replanting around 800ha to 900ha annually, which supports long-term yield recovery and sustainability.”

UOBKH Research said it also expects lower costs to aid the Hap Seng Plantations’s performance, noting that the plantation group is targeting lower unit CPO costs of RM2,300 per tonne this year, down from RM2,421 per tonne last year, supported by stable labour and fertiliser costs.

“We note that the company had already tendered its fertiliser application in 1H25 at flat prices y-o-y,” the research house added.

Citing independent market researcher Arus Media, the research house said global fertiliser affordability dropped to its lowest level in two and a half years in March, mainly due to high phosphate and potash prices, weaker crop values, and reduced exports from China raising concerns over rising fertiliser costs.

“This is further compounded by the escalating US-China trade war, which could impact fertiliser prices, as Hap Seng Plantations imports its fertiliser from Canada,” it said.

On the weather front, UOBKH Research said conditions in Sabah, where Hap Seng Plantations’ estates are located, is still experiencing rainfall across its estates, though conditions have improved compared with January and February.

“According to the forecast for April 9 to 16, Sabah is expected to receive moderate to high rainfall, with precipitation levels ranging from 65mm to over 95mm. This indicates favourable moisture conditions that may support palm oil productivity,” the research house said.

On CPO and palm kernel prices, the research house said risks from the escalating US-China trade war could lead to higher volatility in the market.

“Based on Malaysian Palm Oil Board spot prices, the CPO average as of 1Q25 was higher by 18.6% y-o-y at RM4,723.80 while palm kernel prices also increased by 63% y-o-y in 1Q25,” it said.

UOBKH Research maintained its “buy” rating on Hap Seng Plantations, with a revised target price of RM2.45 a share from RM2.35, based on a valuation that is about one standard deviation below its five-year average price-earnings ratio of nine times.

$HAPSENG / 3034 (HAP SENG CONSOLIDATED BERHAD)

Source from The Star

Inspired by @boncos and @terence775 thread of companies that pay dividends as a means to reward shareholders, I’ve just roughly screened through and compiled a list of companies that …

i) have a formal dividend policy (according to their latest annual reports)
ii) proven to have track record profits / retained earnings (rough screening profitability for at least the recent 5 years)
iii) and whose business would (hopefully) be relevant during a recession or financial turmoil (no guarantees)

I would exclude REITs from the list since it is compulsory for them to payout at least 90% of their earnings anyway. Also, there’s no ranking for list and is entirely random:

$HAPSENG / 3034 (HAP SENG CONSOLIDATED BERHAD) (MC: RM10.3bil) - Not less than 50% dividend payout rate
$PETGAS / 6033 (PETRONAS GAS BERHAD) (MC: RM35.3bil) - Dividend policy of approx. 50% of PAT
$KLSE-CDB (MC: RM42.8bil) - Minimum 80% dividend payout ratio
$TENAGA / 5347 (TENAGA NASIONAL BHD) (MC: RM81.1bil) - Dividend policy of 30% - 60% payout ratio of PATAMI
$MAYBANK / 1155 (MALAYAN BANKING BERHAD) (MC: RM122.1bil) - Dividend policy of 40% and 60% of net profit

MC: Approximate Market Cap

**Note: the dividend payout is subjected to cash flow, valuation gain/loss of properties, etc. (for details please read their respective annual reports)

boncos thread: https://cutt.ly/tecnuqF4
terence775 thread: https://cutt.ly/pecnuqVo

OTHERSHap Seng Consolidated Berhad ("HSCB" or "the Company")
- Striking off of MML Marketing Pte. Ltd.

HAPSENG - Notice of Book Closure

$HAPSENG / 3034 (HAP SENG CONSOLIDATED BERHAD)

KUALA LUMPUR: HLIB Research has increased its core net profit forecast for Hap Seng Consolidated Bhd for the financial year 2024 (FY24) by 4.7 per cent.

© New Straits Times Press (M) Bhd

Quarterly rpt on consolidated results for the financial period ended 31/03/2024

First Interim Dividend

General Meetings: Outcome of Meeting

Part A - Circular to Shareholders in relation to the Proposed Renewal of and New Shareholders' Mandate for Recurrent Related Party Transactions and Part B - Share buy-back Statement in relation to the Proposed Renewal of Share Buy-back Authority

Annual Report & CG Report - 2023

OTHERSHap Seng Consolidated Berhad ("HSCB" or the "Company")
1) Proposed renewal of and new shareholders' mandate for recurrent related party transactions of a revenue or trading nature ("Proposed RRPTs Mandate"); and
2) Proposed renewal of authority for the Company to purchase its own shares ("Proposed Renewal of Share Buy-Back Authority")
(Collectively referred to as the "Proposals")

PLANTATION
$IOICORP / 1961 (IOI CORPORATION BERHAD) $HAPSENG / 3034 (HAP SENG CONSOLIDATED BERHAD)
Research by HLIB
Neutral

“10-month-low stockpile”

Palm oil stock level fell for the fifth consecutive month, by -10.7% MoM to 1.72m tonnes in Mar-24 (the lowest since May-23), as seasonally strong exports demand more than offset higher output. We believe stockpile will resume its uptrend from Apr-24, as production will likely remain on uptrend (due to seasonality) while exports will likely weaken on the back of the absence of festive-driven demand and palm’s weak price competitiveness over other competing oils. We maintain 2024-25 CPO price assumptions of RM4,000/tonne and RM3,800/tonne, as well as our NEUTRAL stance on the sector. For exposure, our top picks are IOI (BUY; TP: RM4.66) and HSP (BUY; TP: RM2.06).

Analyst(s):
Chye Wen Fei
wfchye@hlib.hongleong.com.my

PROVISION OF FINANCIAL ASSISTANCE

PLANTATION
$KLK / 2445 (KUALA LUMPUR KEPONG BERHAD) $TSH / 9059 (TSH RESOURCES BERHAD) $FGV / 5222 (FGV HOLDINGS BERHAD) $IOICORP / 1961 (IOI CORPORATION BERHAD) $HAPSENG / 3034 (HAP SENG CONSOLIDATED BERHAD)
Research by Ambank
Neutral

“Large soybean supplies to keep grain prices low”

We are Neutral on the plantation sector. Our average CPO price assumptions are RM4,000/tonne for pure Malaysian planters and RM3,700/tonne for those with Indonesian operations. We have BUYs on KL Kepong (Fair value: RM25.20/share), Hap Seng Plantations (Fair value: RM2.30/share) and Genting Plantations (Fair value: RM6.80/share).

Analyst(s):
Gan Huey Ling, CFA
gan-huey-ling@ambankgroup.com

KUALA LUMPUR: Hap Seng Consolidated Bhd chairman Thomas Karl Rapp says KL Midtown is open to selling its two signature Grade A corporate towers en-bloc.

© New Straits Times Press (M) Bhd

TRANSACTIONS (CHAPTER 10 OF LISTING REQUIREMENTS) : NON RELATED PARTY TRANSACTIONSHAP SENG CONSOLIDATED BERHAD ("HSCB"/"the Company")
- Proposed acquisition of all that parcel of vacant commercial land known as Met 3, Plot 7A, KL Metropolis from TTDI KL Metropolis Sdn Bhd ("Proposed Met 3 Acquisition")

AUTOMOBILE
$SIME / 4197 (SIME DARBY BERHAD) $HAPSENG / 3034 (HAP SENG CONSOLIDATED BERHAD)
Research by Ambank
Neutral (Maintained)

“Updates from the showroom floor”

We embarked on a tour of car showrooms throughout town over the weekend, and along the way, we caught up with a friend deeply entrenched in the world of auto financing and another in the used car trade.

Analyst(s):
Team Coverage
603 2036 2333

Quarterly rpt on consolidated results for the financial period ended 31/12/2023

PLANTATION
$FGV / 5222 (FGV HOLDINGS BERHAD) $GENP / 2291 (GENTING PLANTATIONS BERHAD) $HAPSENG / 3034 (HAP SENG CONSOLIDATED BERHAD) $IOICORP / 1961 (IOI CORPORATION BERHAD) $KLK / 2445 (KUALA LUMPUR KEPONG BERHAD)
Research by HLIB
Neutral (Maintain)

"Lowest stockpile in 6 months"

Palm oil stockpile fell by -11.8% MoM to 2.02m tonnes in Jan-24, as lower exports were more than offset by lower opening stocks, imports, and production. The stock level came in lower than Bloomberg’s survey’s estimate of 2.09m tonnes, as exports beat expectations. Stockpile will likely dip below 2m tonnes in Feb-24, as palm oil production will likely decline further in Feb-24 (arising from seasonality). We maintain 2024-25 CPO price assumptions of RM4,000/tonne and RM3,800/tonne, as well as our Neutral stance on the sector. For exposure, our top picks are IOI (BUY; TP: RM4.66) and HSP (BUY; TP:
RM2.06).

Analyst:
Chye Wen Fei
wfchye@hlib.hongleong.com.my

OTHERSHap Seng Consolidated Berhad ("HSCB" or "the Company")
- Striking off of HSC Melbourne Holding Pte. Ltd.

PROVISION OF FINANCIAL ASSISTANCE

2023 Portfolio Review – The journey of learning structured warrants, arbitrage, and the importance of liquidity management.

Inspired by Stockbitor @ricardomilos1021 comprehensive portfolio review (link: https://cutt.ly/xwHTmqoi), I am writing mine here.

2023 is a so-so year for me (not achieving my target) since I am not really proactive in the stock market. The good news? I didn’t lose since my portfolio is more on defensive turnover play counters (with dividend payout) and opportunist swing trading. My losses are offset by the trading and dividend gain.

What happens in 1H2023:
1) Low risk trade on $MBSB / 1171 (MALAYSIA BUILDING SOCIETY BERHAD) special dividend.
Before the completion of MIDF share acquisition from PNB at RM0.97 per share, MBSB declare a special dividend of 8.5sen (it is officially announced as interim dividend but personally I consider it as special dividend because it deviates from the historical payout). I entered a small position and earned some kopi money. I didn’t hold it for long because I don’t really understand how to valuate financial company. In retrospect, I should have traded for more since it has protected downside (3sen dividend per annum, consider around 5% DY at that time) which is not easy to find in the stock market.

2) Learning about index rebalancing trading opportunity
At the close of 31 May 2023, $HAPSENG / 3034 (HAP SENG CONSOLIDATED BERHAD) was removed from MSCI Emerging Market Index (EMI), causing it to further gap down on its downtrend, which represents an opportunity to buy cheap for the investors. This is because the index funds are obliged to sell Hapseng as it is removed from the index, creating a short-term imbalance in market supply and demand. (Figure 1)

On contrary, $HARTA / 5168 (HARTALEGA HOLDINGS BERHAD) was replaced by Gamuda in MSCI EMI index as on 28 February 2023 – which explain the surge in trading volume - yet the share price go up following the gloves recovery story. My guess is that at that time, Harta is being priced at so low that the market believe the worst has already been priced in while the good news haven’t been factored in. (Figure 2)

I watched from the sideline in both events.

3) Learning about exceptional gain on structured warrants
Amazed by Stockbitor @Jay888 exceptional (if not astronomical) gain, I dive into researching structured warrants. My understanding of structured warrants have been enhanced but I am yet to put it into practice considering the high volatility and liquidity risk. Thanks for sharing @Jay888 !


What happens in 2H2023:
4) More trading gains
Since I become relatively active in the stock market compared to 1H2023, I make some small profit on trading from counters such as $PARKSON / 5657 (PARKSON HOLDINGS BERHAD) and $MSM / 5202 (MSM MALAYSIA HOLDINGS BERHAD) .

5) Putting arbitrage into practice
Since I learned a lot on arbitrage, I try to put my knowledge into practice. What I found is that: (a) for arbitrage, entry price, timing, and liquidity is crucial. The entry price must be low enough to obtain a reasonable return with certainty, and the operation length should be as low as possible support with good liquidity to avoid lock up (this extremely depends on the arbitragers experience and judgement). (b) sometimes, even arbitrage with fundamentals can be risky due to extreme market reaction, however the extreme market reaction at the same time can offer enticing entry price with strong margin of safety for the arbitrage.

6) Portfolio Management: Liquidity
In 2H2023, I learned about how to gauge the free float and liquidity of stocks by looking at the number of shareholders in % shareholdings in the Annual Report. This can tell about whether the stock is mostly hold by long term investors or retailers, and whether the public spread is mostly hold by a few investors.

Besides, I learned that as an active investor, it is best for the portfolio to be flexible, and to do that liquidity is important. From time to time, new investment opportunities may be discovered, and capital allocation may be revised. For example, a counter holding for long term, doesn’t necessarily implies that the investor must hold it until the market revaluation occurs. In fact, in the time between, the investor can switch to another short-term investment opportunity, and then repurchase the counter again in the future. This operation strictly relies on the investor’s acumen to identify the certainty of the short-term investment (whether the short-term investment is worth for selling the long-term holding, how much capital should be relocate, etc.), and the preparation for the worst (after the capital relocation, what should be done if the market suddenly started to revalue the long-term counter? What if the timeframe for the short-term investment become longer than expected?).

To wrap it up, there is no fast and hard rules in portfolio management (so is on investing), it solely depends on which type of investors we are. Besides, in the same way that abide to principles and rules facilitate fast and immediate decision-making and help in reducing chance of making mistakes, it is equally important to be flexible and open-minded (in considering every opportunity) since investments tend to be case-by-case basis.

7) Never belittle any gains or losses.
I kind of realise this through practice. A 10% trading amount earns 10% contribute 1% gain to total portfolio. Accumulated, the 1% gain can become a significant amount too (so is the losses). Hence, I should respect and give my best in any types of trades, whether it is long-term or short-term, in order to maximise the profits and minimize the losses.

8) Portfolio consolidation
Moving towards the year end, I started to trim/exit those small trading positions and concentrate my portfolio on few counters in preparation for 2024.

9) Mistake: missed MKH trade
Since I am using a direct account, I thought that I can’t get MKHOP shares via holding its mother shares MKH, hence I missed around RM1.20 low entry price of MKH. In fact, MKHOP shares will be debited to my direct account from the share registrar if I hold any MKH shares before the ex-date. (Disclaimer: I did not hold any MKH shares as per writing. Invest at your own accord.)


Looking back, I had adhered to my principles that I shouldn’t buy what I don’t know throughout 2023 (maybe that is what limited my downside as well as upside). However, I believe I can do better in being more proactive in understanding what I don’t know such as YTL, Ranhill, MKH, etc.

Moving forward my 4th year in the investment world, I wish that I could develop a glimpse in anticipating the upcoming economic trends / changes in economic cycle and become a top-down investing beginner, broaden my industry knowledge, as well as meet or even better, surpass my yearly investment target.

For closing, I shall end with @doitduitcom ’s market outlook https://cutt.ly/WwHTmqNE which I think is interesting and worthwhile to ponder and think about. I have yet to develop mine.

What is the year 2023 for you and what is your expectations/outlook for 2024? Feel free to leave your comments to discuss below!

Why Conglomerates Trade At A Discount

A conglomerate is a company that owns a controlling stake in a number of smaller companies which operate independently from each other. There are some famous conglomerates in Malaysia such as $GENTING / 3182 (GENTING BERHAD), $HAPSENG / 3034 (HAP SENG CONSOLIDATED BERHAD), BJCORP and so on. Surprisingly, even Google operates as a conglomerate under the name Alphabet Inc., listed on Nasdaq rather than Google itself. However, despite their diverse holdings, conglomerates often trade at a discount compared to the cumulative value of their individual parts.

Today, let's delve into why conglomerates tend to face this discount and explore an example using $GENTING / 3182 (GENTING BERHAD), $GENM / 4715 (GENTING MALAYSIA BERHAD), $GENP / 2291 (GENTING PLANTATIONS BERHAD), and SGX:G13 as a case study!

Have you spotted any other significant discounts? Let us know in the comment section below!

$HAPSENG / 3034 (HAP SENG CONSOLIDATED BERHAD)

HAPSENG - Notice of Book Closure

With one more quarter left to go, Hap Seng Consolidated Bhd is cautiously optimistic of a satisfactory results for its current financial year.

Second Interim Dividend

KUALA LUMPUR: With one more quarter left to go, Hap Seng Consolidated Bhd is cautiously optimistic of a satisfactory result for the current financial year.

Quarterly rpt on consolidated results for the financial period ended 30/09/2023