Please let me know the reason behind the decreasing biological assets? Is it because the report in Sl rupee?
If i invest in Carson group, the main reason would be their expose to local beverage sector.
Regarding the government plan on minimum public floating. What would be CARS group's (CARS & BUKI only) reaction ( worse case)?
By the decreasing biological assets, i presume you mean Changes in fair value of biological assets in the Income statement note # 5. yes it has been less in the last 2 quarters in comparison to past periods. most probably this is due to timing of the plantation cycle. see, Carsons Singapore Palm Oil group subsidiary, of which it owns approx 60-65 %, Goodhope Asia Holdings Limited (GHAHL), owns an approx 150,000 Hectares Land Bank in Kalimantan (Borneo) Indonesia. FROM from their last AR in 2012/2013, 50,000 Hectares was planted & mature, 10,000 was planted & immature and 15,000 was been cleared and under development / for planting in this current FY.
The fair value biological Gain is only from the immature plantations. so it could very well be that the previous immature plantations bore fruit and thus became mature and the 15,000 is currently being planted and thus not yet immature but will be in subsequent quarters.
In palm oil, you first have to clear land, prepare soil, and then plant from nursery. and it takes approx 28 months until the first fruit bunches arrive. from 28 months onward, you will get a 1-2-3 tons / hectare until 60 months = 5 tons/hectare. then bell shaped curve max 8 tons / hectare tapering at year 15 and declining until year 25 when it will need replanting. cost to develop one hectare (clearing, soil preparation & planting) cost usd 5000 / hectare. for the past 3-4 years, they have been developing approx 10,000 hectares / year (usd 50 mill) from the usd 50-100 mill profits they have been making. during 2010/11, GHAHL make over usd 100 mill due mainly to high CPO prices.
Regarding Breweries, best value is BREW but its illiquid.
remember 2 LION shares = 1 BREW share (in actual value)
but price 1 BREW is much less than 2 lion shares.
When you look at CARS, the value break-up is as follows
Palm oil - Rs 425 ( based on value of GHAHL)
Breweries - Rs 75 (based on market price of BREW)
Investments - Rs 75 (based on NAV of GUAR)
Equity / Hotels - Rs 25 (based on NAV of these assets).
So i guess, no point buying CARS for Breweries exposure.
Regarding Minimum Float requirement, i did not see their name on the list in the newspapers. looking at the shareholder list, difficult to say who the beneficial shareholders are and how much they own. also, due to the Market Capitalization clause, they may not be impacted. i'm not sure.
However, in time to come, the most obvious thing for them to do is to merge BUKI & CARS as they are both mirror images of each other. then that combined entity will own approx 88 % of GHAHL which in 4-5 years, at current palm oil prices, could make usd 200 mill net profit / year. this may happen just before the inevitable GHAHL IPO / Listing in perhaps Singapore, when they could offer part of their combined 88 % stake for sale in a future GHAHL IPO.