Friday, November 25, 2011

TDM Good Yield Good Growth

For the latest quarter ended 30.9.2011, EPS equals 21.88 sen. This is indeed commendable. It is 95% better than the previous corresponding period, and 71% better than the preceding quarter. Review of performance of the group reads as follows:

Plantation Division Our Plantation Division reported a 95% increase in profit before tax for the first nine month ended 30 September 2011 compared to the same period last year mainly due to:
i) Higher production of CPO & PK by 12% and 7% respectively. ii) Higher average CPO & PK prices by 32% and 78% respectively:
Healthcare Division Healthcare Division registered higher revenue and profit before tax by 16% and 15% respectively due to increase in number of patients being treated at our hospitals by 8% .
Food Division (Discontinued operation) Food Division recorded profit of RM2.0 million due to increse in average prices of livebird by 20%.

Based on the prevailing CPO and PK prices, the outlook for financial year ending 31 December 2011 remains favourable. Barring unforeseen circumstances, the Group is expected to continue to record satisfactory performance in the current financial year.

Going forward, the group will become more and more profitable as more and more of its lands in East Kalimantan mature. Besides that, its healthcare business is also doing well. The group is cash-rich and has the potential to take opportunity to grow as and when an opportunity arises.

For the year ended 31.12.2011, its EPS is likely to exceed 71 sen. Based on EPS of 71 sen, and on the basis of being traded at 10 times earnings, the stock is worth RM7.10 per share.

At RM3.45, the forward PE works out to be 4.86 which is undemanding. This means the stock is not overvalued.

Disclaimer: As a result of this article, whether you buy, sell or hold TDM, you do so at your own risk absolutely.