MPRH is it the most undervalued stock in plantation sector?

Metropolitan Resource Holdings

9 months earnings RS 11.52

3 months earnings RS 6.19

Market Price 23.40

http://www.cse.lk/cmt/upload_report_file/724_1360580346484.pdf

@Nigel.Machado,

1). Did you notice any other interesting formation in trading price of MPRH with its main sub BOPL ?

67 % of Bogawanthalawa is under Metro holding.


2). We are getting good results from most of tea plantations.
In this situation nothing but FLCH is coming to my mind . If they have done same ......

Chinwi wrote:@Nigel.Machado,

1). Did you notice any other interesting formation in trading price of MPRH with its main sub BOPL ?

67 % of Bogawanthalawa is under Metro holding.


2). We are getting good results from most of tea plantations.
In this situation nothing but FLCH is coming to my mind . If they have done same ......

FLCH is doing quite good volumes recently. yesterday it did about 1.5MN shares. today its about 700,000 upto now.

Re-guarding MPRH its not that liquid, but Ameco Limited's holding of 457,030 shares were sold in the market betwee rs 16-22. Making the counter bit more liquid. I think thats why we see some sellers at this price range even after RS 11.52 earnings for 9 months.

Dr T senthilverl is holding 12MN shares of BOPL at around 22 as i can remember.

We may expect a plantation rally quite soon, even rubber has done quite well.(considering results of KGAL)

I believe most of us know Nizamdeen Singh Laxana alias MarketWatch. He is having an ability to identify the market trend. I noticed he is in the top 20 share holder list in both MPRH and MASK.

Monster wrote:I believe most of us know Nizamdeen Singh Laxana alias MarketWatch. He is having an ability to identify the market trend. I noticed he is in the top 20 share holder list in both MPRH and MASK.

yes even i noticed it. Nizamdeen Singh Laxana alias (MarketWatch) he is in the top 20 list of MPRH & MASK.

Yes, But he bought BOPL at a lot higher price ( closer to Rs 20 if I am not mistaken) . Then he averaged last year.

Then he seemed to have got into other plantations.

Also does he have inside info? ?He seems to know when to exit B FL again during last run in sept.


Agree that he seems to have good analytical skills .

Nigel.Machado wrote:

Monster wrote:I believe most of us know Nizamdeen Singh Laxana alias MarketWatch. He is having an ability to identify the market trend. I noticed he is in the top 20 share holder list in both MPRH and MASK.

yes even i noticed it. Nizamdeen Singh Laxana alias (MarketWatch) he is in the top 20 list of MPRH & MASK.

slstock wrote:Yes, But he bought BOPL at a lot higher price ( closer to Rs 20 if I am not mistaken) . Then he averaged last year.

Then he seemed to have got into other plantations.

Also does he have inside info? ?He seems to know when to exit B FL again during last run in sept.


Agree that he seems to have good analytical skills .

Nigel.Machado wrote:

Monster wrote:I believe most of us know Nizamdeen Singh Laxana alias MarketWatch. He is having an ability to identify the market trend. I noticed he is in the top 20 share holder list in both MPRH and MASK.

yes even i noticed it. Nizamdeen Singh Laxana alias (MarketWatch) he is in the top 20 list of MPRH & MASK.

I googled this guy ! He seems to specialize in research in the Tea Industry. lots of stuff re Kenyan tea market etc. he also has a Blog and a Facebook page in which you can follow him.

@ Monster, N.M & others,

I put some orders for F @ 2.50 . Did not get yet.
Somehow got some M.

This is the thing I wanted to tell :-

Profit reported
BOPL 274 million , MPRH 200 million excl. minority.
EPS BPOL=3.28 ,,EPS of MPRH is 11.57

67% of BOPL income is coming to MPRH.

EPS is low in BOPL because, Issued no of shares in BOPL is 83 million while MPRH is only 17 million.

MPRH owns 56.4million shares of BOPL

56.4 / 17 = 3.3 shares.
i.e. 1 MPRH is representing 3.3 BOPL

BOPL trading @ 13/- with PER of 4.0
13 x 3.3 = 43/-

Still you can buy 1 MPRH @ 23.50

(EPS, PER are approx. 9 months figures)

Chinwi wrote:@ Monster, N.M & others,

I put some orders for F @ 2.50 . Did not get yet.
Somehow got some M.

This is the thing I wanted to tell :-

Profit reported
BOPL 274 million , MPRH 200 million excl. minority.
EPS BPOL=3.28 ,,EPS of MPRH is 11.57

67% of BOPL income is coming to MPRH.

EPS is low in BOPL because, Issued no of shares in BOPL is 83 million while MPRH is only 17 million.

MPRH owns 56.4million shares of BOPL

56.4 / 17 = 3.3 shares.
i.e. 1 MPRH is representing 3.3 BOPL

BOPL trading @ 13/- with PER of 4.0
13 x 3.3 = 43/-

Still you can buy 1 MPRH @ 23.50

(EPS, PER are approx. 9 months figures)

In a nutshell you mean MPRH is undervalued.

MPRH is trading at a pe of 1.2-1.4

Also Net asset value is 40.

see MPRH shareholder No.19..........Ha haaaaa

As at 31.12.2012
Name of the Share Holder No of Shares %
01.Mr.D J Ambani 4,213,860 24.41
02.Ocema Investment Company (Pvt) Ltd. 3,046,875 17.65
03.Kelmarsh Investments Ltd. 2,798,933 16.21
04.Sealbe Holding AG 1,457,415 08.44
05.Mr.Lars Tryggwe Christer Murman 1,313,951 07.61
06.Mr.Carl Machael Oscarsson Haglind 1,161,537 06.73
07.Metrocorp (Pvt) Ltd 827,935 04.80
08.Mr.R D Bandaranaike 726,046 04.21 09.J.B.Cocoshell (pvt) Ltd 145,000 00.84
10.Mr. A.V. Ravindra De Silva Jayathilake 65,507 00.38
11.Mr. Mohamed Nizam Singa Laxana 60,900 00.35
12.Sino Lanka (pvt) Ltd 46,500 00.27
13.Mr.Lars Soderbrrg 36,562 00.21
14.Mr. Selladurai Gobinath 33,000 00.19
15.Mr. Vithana Palitha Koralalage Anusha Palitha 31,683 00.18
16.First Capital Market Ltd./ Ventura Crystal (Pvt) Ltd. 30,200 00.17
17.Mr. Muruga Pillai Kesawamoorthy 30,000 00.17
18.Mr. Hasim Abdul Nasar 29,000 00.17
19.Mr. Rosairo Nigel Machado 29,000 00.17
20. Laxey Partners Ltd. 26,637 00.15
Directors Share Holding as at 31st December 2012
Name of the Director No of Shares %
Mr. D.

Yes i am holding MPRH. Not only MPRH but most tea based plantations.

Duh.. 29,000 is a good amount

But 60,900 is a better figure for some easy profit

We should know that these are for long term investment, right?

Stupid me, I didnt see this MPRH first

The thing with BOPL is, its nearly half the price MPRH... But the latter looks better since the qty is less too.

My concern abt FLCH is the rains we see these days, while these rains are good for hydro projects, it can have mixed results for Tea and bad for Rubber. And FLCH is over 90% plantations
But 2.40 - 2.60 is a good price range.

What I know is the temperature, rainfall, humidity and soil pH affects the quality of tea too.
Some say the high rainfall level is expected to produce a bumper harvest also.

So can someone explain pls..

I wouldn't trust MW advice if I were you.....

But MRPH is a good company. I remember somewhere there was some allegation against the Ambani family who is holding the firm together....I can't remember but I guess you guys can research.

refer to this link:

http://forum.srilankaequity.com/t343-mr-mohamed-nizam-singa-laxana-who-is-he

Nigel.Machado wrote:Yes i am holding MPRH. Not only MPRH but most tea based plantations.

I think you are smart because I cannot see your name in BOPL list. As per my theory you are holding about 1 lak of BOPL through MPRH. :-)

Thank you for appearing in real name.

MPRH was in my radar for many months.
I collected it months ago in small quantities. For last 6 months it maintained its price around 23/-
Somehow, I was involved in over 50% of transactions done in the morning hrs. today to double my holding.
I do not think you sold it to me bet. 23/- - 23.50.

IF weather and tea prices maintained in favorable levels I should join you in the list next time !

Chinwi wrote:@ Monster, N.M & others,

I put some orders for F @ 2.50 . Did not get yet.
Somehow got some M.

This is the thing I wanted to tell :-

Profit reported
BOPL 274 million , MPRH 200 million excl. minority.
EPS BPOL=3.28 ,,EPS of MPRH is 11.57

67% of BOPL income is coming to MPRH.

EPS is low in BOPL because, Issued no of shares in BOPL is 83 million while MPRH is only 17 million.

MPRH owns 56.4million shares of BOPL

56.4 / 17 = 3.3 shares.
i.e. 1 MPRH is representing 3.3 BOPL

BOPL trading @ 13/- with PER of 4.0
13 x 3.3 = 43/-

Still you can buy 1 MPRH @ 23.50

(EPS, PER are approx. 9 months figures)

Excellent Analysis Chinwi ! Yes I too noticed this market anomaly (and arbitrage opportunity ?) in market pricing between BOPL and MPRH. In fact it was more pronounced in October 2010 when BOPL announced a 1 for 9 rights issue at Rs 10. At that time too, MPRH was trading at a very attractive discount to its value / holding of BOPL. Furthermore, MPRH (Company) has further Rs 20
assets / investments so NAV based on BOPL holding could be Rs 60-65 !
These market anomalies are nothing new to our market and a few still exists like price relationship between LMF & DIST, CFI / CIT & CFLB, RENU etc. Even FLCH had Rs 1.40 Cash Per Share and was trading at Rs 1.50. we have discussed these in the past on some other threads.

Re BOPL / MPRH, my observations and some areas to look into are as folls -

1. For the first time, MPRH has reported 3rd Q results. In previous years, they only give there results for the Sep and March quarter. is it something to do with listing in the Diri savi board ?

2. 50 % of bottom line Profit come from Other Income. Majority of this could be Gains from Fair Value of Biological Assets, which has no Cash Flow Impact. without notes in the interim statements, cannot say the quantum for sure. This maybe Timber stock like Madu. High NAV, Good EPS (due to gain in the biological assets valuation) but no cash !

3. No doubt, it has been a good quarter for Tea Plantations - Good Prices for Tea as strong correlation with world energy prices which are rising too. So MASK, BOPL, MADU, MAL, TPL etc will do well in the short term. what is the future impact of rising Electricity, Diesel and Petrol Prices in March / April ? I am hearing this will happen. Then the Plantation Wage Increments in June. One thing is for sure, as soon as this sector is doing well, they will have to pass on the benefits to the workers through higher wages. This is a political reality.

4. Having said that, most plantation stocks are trading at 3-4-5 times trailing earnings. one of these days their should be a plantation rally as its overdue now for 2-3 years in this cyclical industry.

Can we call this thread a promotion because people who hold this are doing the talking.

prabath wrote:Can we call this thread a promotion because people who hold this are doing the talking.

NO.. I see valid reasons given to justify these fundamentally good counters.

You cannot expect anyone not to talk about their shares, after all, its obvious if the members talk about shares they dont hold. However, as long as valid reasoning is provided, its not promotion. As you can see, they talk why they've bought these and what they expect in future with these.

prabath wrote:Can we call this thread a promotion because people who hold this are doing the talking.

Of course not.They are discussing it in rational manner with available informations.These types of discussions among real investers help new comers to learn.....

Nice & valuble discussion with facts & figures. Love to see this type of analysis. Thanks everyone.

There is no real arbitrage opportunity as buying stock in MPRH doesn't give you control of BOPL shares - its like DFCC holding 20b worth of COMB shares

@ The Alchemist,

Thank you for highlighting the facts I missed.

Specially , "50 % of bottom line Profit come from Other Income. Majority of this could be Gains from Fair Value of Biological Assets"
Yes they do this every time. Hence we must know if EPS is 11/-, 5.50 is cash and rest is in trees and they will grow further.

IMO, this practice is Ok if you get funds from core business to run the company until you harvest the trees.
( Not like in Pyramid Timber companies (world wide) which use money from new investors to pay salaries and pay back old investors )

I think, up and down in plantations, power sectors due to various factors (including what you mentioned) provide opportunities to long term investors to gain if they understand the nature of these sectors.


Note:
Somehow, I did not use outside funds or margin loans for my recent purchases. Just sold some nonperforming(s) to try new fortunes.

"Nonperforming" = The stocks I thought good but lost their potential due to changes in macro economic or any other factors in the country OR just bad hits.

We all know that Tea business is doing better than Rubber these days. All MPRH,MASK & TPL have mor than 90% exposure to Tea.

When we consider plantations their is always a seasonal Risk involved with it.

How to minimize this risk is to buy plantation stocks below their Net Assets Value. Unlike shares like BOPL all above given shares(MPRH,MASK,TPL) trade below their net assets value.

To be exact NAV of the shares are as follows

MPRH - 40
MASK - 31
TPL - 47

Also earnings of these shares are very healthy. For the last quater EPS of these shares were

MPRH - 6.19
MASK - 3.50
TPL - not released

Last quarter was quite an exception, projected sustainable minimum eps annually for above given shares could be

MPRH - 9
MASK - 5.5
TPL - 6

at a price earning ratio of 5 these shares may worth

MPRH - 9*5 = 45
MASK - 5.5*5 = 27.5
TPL - 6*5 = 30

So even at your target exit price these shares will have value as they trade at a p/e ratio of 5 & below their Net asset value. Anithing above will be a Bonus.

*Speciality of TPL is the high payout ratio(dividend of rs2.5 per share) as we all know TPL is a better managed company in the plantation sector, It can be given a high p/e as well.

For me these 3 are the best picks within tea based plantations. Share your view.

I feel to be risk averse when selecting plantation stocks you need to consider crop diversity. Your above points are appreciated. Plantations such as Namu and kegall in this instance is very special Namunukula has palm as well and Kegall is the leading plantations on rubber. Plantation investments are always risky ad cyclical but always a very good investment in the long run as it generates cash on an ongoing basis. Note : I do not own shares of any of these but wanted to give inputs as I have invested in these stocks in the past.

Nigel.Machado -> Do u really need another thread for this?

This looks like promotion to me..

smallville wrote:Nigel.Machado -> Do u really need another thread for this?

This looks like promotion to me..

Promotors will need to promote and get out of plantations before the wage hike hits in the second half of the year.