Insider Asia’s Stock Of The Day: Kim Loong Resources Bhd

by **Cals** Thu 11 Dec 2014, 02:51

Insider Asia’s Stock Of The Day: Kim Loong Resources Bhd

By InsiderAsia / InsiderAsia | December 10, 2014 : 11:50 AM MYT

Kim Loong Resources
Kim Loong Resources Bhd ([You must be registered and logged in to see this image.] Financial Dashboard) is shaping out to be a high dividend yielding stock, due to a cash-rich balance sheet and above-average yields for its plantations. The company has 15,928 ha of plantation land in Johor, Sabah and Sarawak, and three mills.

While most larger plantation stocks are trading on high P/E ratios of over 20 times, the smaller ones are trading at much lower valuations, which suggest better upside prospects when palm oil prices eventually recover next year due to cyclically lower production growth.

Kim Loong is one of the cheapest stocks in the sector, trading at a 12-month trailing P/E ratio of just 10 times and 1.4 times book. In addition, its cash rich balance sheet and consistent payouts appeal to those seeking high dividends. As at 2QFY2015, net cash stood at RM243.3 million or 78.3 sen per share, equivalent to almost one-third of the current share price of RM2.88.

Historically, Kim Loong has been paying out dividends since 2001, with minimum annual dividend of 10 sen over the past five years. In FY2014, it paid out 13 sen, which translates to a yield of 4.5%.

Despite volatile palm oil prices, its pre-tax profit has been relatively stable, ranging between RM79.5 million and RM95.4 million over the last five years, except for a surge to RM165 million in FY Jan 2012. Revenue hovered between RM451.5 million and RM768.3 million in the same period.

In FY2014, revenue rose a marginal 0.5% to RM640.4 million while net profit rose 13.2% to RM61.1 million. For 1HFY2015, revenue rose 48.3% to RM414.3 million while net profit surged 82.3% to RM46.5 million.

With some 87% of Kim Loong’s trees already matured, future growth will be driven by the development of 1,700 ha tract in Sarawak secured late last year.
[size=14]This article first appeared in The Edge Financial Daily, on December 10, 2014. [/size]