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FINANCIAL CHRONICLE™ » CORPORATE CHRONICLE™ » Madulsima (MADU)- Is there any value in Timber?

Madulsima (MADU)- Is there any value in Timber?

4 posters

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innam

innam
Manager - Equity Analytics
Manager - Equity Analytics

MADU has been a forgotten share over last 1-2 years and rightly so as the company has been continously making losses due to it's nearly 100% exposure to tea. The owners have been bleeding the company through high management fees in the past as well.
However there is an interesting disclosure in the September interim financial statements, note 2 says
The Carrying Value of Fuel wood (Timber) Plantations which reflects as Rs. 110.667 Mn.as at 30th September 2010, have been revalued by an independent Qualified Valuer and the revaluation has not yet been incorporated into the Financial Statements. The revalued amount is Rs.2,261,054,393/=
If we can rely on this disclosure it means that the Net Asset Value will be revalued upwards by nearly 70 rupees in the December statements.
A plantation should not be valued on NAV (although TWOD does it), but if this 2 billion revalation is realistic the share seems to be significantly under valued.

Quibit


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics

Hey, Innam

You are spot on, I myself have been looking at MADU (From analytical point of view) to determine the impact of this valuation. But I came to the same conclusion as of your.

Plantations are on leasehold from the government and leasehold value of MADU has increased due to the availability of the trees. But the question remain as to whether MADU could realize the asset and bring it into the profits. If they are to do so, the they need to come up with a replanting program and get approval from the government to convert the trees into timber and sell locally or export them.

But I agree with you, MADU is a share to watch. Owners have done miracles in the past. So they might pull a rabbit out of their hat!!!

Cheers
Quibi

mono

mono
Vice President - Equity Analytics
Vice President - Equity Analytics

2.2bn in dara?

innam

innam
Manager - Equity Analytics
Manager - Equity Analytics

seems dara is very expensive

tubal


Vice President - Equity Analytics
Vice President - Equity Analytics

But the government did say, you cant cut down trees in plantations for timber.

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