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FINANCIAL CHRONICLE™ » CORPORATE CHRONICLE™ » Plantation Co & Holding Companies (RICH, MELS, ASPM/SPEN, DIPD/HAYL, LWL/VONE, LCEY/LDEV, SUN)

Plantation Co & Holding Companies (RICH, MELS, ASPM/SPEN, DIPD/HAYL, LWL/VONE, LCEY/LDEV, SUN)

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factFINDER

factFINDER
Manager - Equity Analytics
Manager - Equity Analytics
This is not to fear anyone. But I shearing these believing that this forum is to support informed investment decisions based on facts.


  • It is well aware that the Govt has already decided and implemented a complete ban on chemical fertilizers, pesticides, and weedicides.


The decision threatens large-scale commercial agriculture, particularly plantations companies. Their output is largely determined by the use of fertilizers/agrichemicals. The situation is extremely serious for TEA (experts in the field anticipate a near-term drop of output by 35-50%). Rubber and other commercial crops will also get affected considerably.

As a result of this ban, we could anticipate adverse impacts to revenue and extremely serious impacts to profitability in next 2-3 years.


  • Apart from all the planation companies listed in CSE, many conglomerates with exposure to plantation sector would affect by this. I have listed below some of the holding companies which have exposure to planation sector (Please add if I miss any).


RICH --- via MASK, KGAL & NAMU (the highest exposure among all)
MELS – via BALA & MADU
LCEY/LDEV – via KOTA & Agrapathana Plantation (unlisted)
DIPD/HAYL – via KVAL & TPL
LWL/RCL/VONE – via HORA
ASPM/SPEN – via EPL
SUN – via WATA
RHL – via Kandy Plantation (unlisted)
JKH & CFIN – via JKL & TSML (although not involved in plantation management)

To understand the relative exposure of plantation business in the parent company reasonably, need to do a little more work to compute the share of revenue and profits generated from plantation business. Also, it might need to consider effective shareholding in the plantation company(s) by the parent which indeed determines by %holding directly/indirectly, etc.

I invite veterans in the plantation industry share their thoughts ……..

Declaration: I have little exposure to the plantation companies directly, however, indirectly exposed quite significantly through most of the holding companies mentioned above.  

Wolf86 likes this post

factFINDER

factFINDER
Manager - Equity Analytics
Manager - Equity Analytics
@factFINDER wrote:This is not to fear anyone. But I shearing these believing that this forum is to support informed investment decisions based on facts.


  • It is well aware that the Govt has already decided and implemented a complete ban on chemical fertilizers, pesticides, and weedicides.


The decision threatens large-scale commercial agriculture, particularly plantations companies. Their output is largely determined by the use of fertilizers/agrichemicals. The situation is extremely serious for TEA (experts in the field anticipate a near-term drop of output by 35-50%). Rubber and other commercial crops will also get affected considerably.

As a result of this ban, we could anticipate adverse impacts to revenue and extremely serious impacts to profitability in next 2-3 years.


  • Apart from all the planation companies listed in CSE, many conglomerates with exposure to plantation sector would affect by this. I have listed below some of the holding companies which have exposure to planation sector (Please add if I miss any).


RICH --- via MASK, KGAL & NAMU (the highest exposure among all)
MELS – via BALA & MADU
LCEY/LDEV – via KOTA & Agrapathana Plantation (unlisted)
DIPD/HAYL – via KVAL & TPL
LWL/RCL/VONE – via HORA
ASPM/SPEN – via EPL
SUN – via WATA
RHL – via Kandy Plantation (unlisted)
JKH & CFIN – via JKL & TSML (although not involved in plantation management)

To understand the relative exposure of plantation business in the parent company reasonably, need to do a little more work to compute the share of revenue and profits generated from plantation business. Also, it might need to consider effective shareholding in the plantation company(s) by the parent which indeed determines by %holding directly/indirectly, etc.

I invite veterans in the plantation industry share their thoughts ……..

Declaration: I have little exposure to the plantation companies directly, however, indirectly exposed quite significantly through most of the holding companies mentioned above.  

Let me analyze first two holding companies’ exposure into Planations

1)      RICH
All three plantation companies NAMU, KGAL and MASK hold through 100% owned subsidiaries. Accordingly, effective holdings are as follows.
    NAMU  67.48%
    KGAL   79.08%
    MASK   83.40%
According to latest financial statement plantation sector accounts, plantation sector account for 16.1% of revenue and 21.3% of operating profits.
 
 
2)      MELS
Both plantation companies BALA and MADU hold directly. Accordingly, effective holdings are as follows.
    BALA   58.61%
    MADU  55.91%
According to latest financial statement plantation sector accounts, plantation sector account for 8.1% of revenue and 3.7% of profits.

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