Sunday, April 15, 2012

Centuary Logistics Holdings Berhad

Century Logistic Holdings Berhad (CLHB) is a total logistic services provider. Its services include: Supply Chain Management, Procurement Logistics Services, Oil & Gas Logistics, Transport Management & Distribution, Warehousing and Shipping, Chartering & Bunker Services.

For the year ended Dec 31, 2011, the key statistics of the company are as follows:
Paid Cap: RM 84,136
Par Value Per Share: RM1
EPS: 37.79 sen (Diluted 32.14 sen)
Dividend: Interim 5 sen s/tier; Final 7 sen s/tier
NTA: RM2.49

The company has a strong balance sheet with cash and bank balances of RM 22.615 million. The company didn't perform satisfactorily in the last quarter of 2011 mainly because of circumstances beyond its control. Its FSUs (Floating Storage Units) operating in Pasir Gudung Johor, have to be cut down to 3 vessels from 8 for a period of 2 months because of a directive from the Marine Department.

The worst flooding inThailand from end-July to mid-January also affected revenue and earnings. These unfortunate incidences are now a thing of the past.

In Feb, 2011, the company bought a piece of freehold land measuring 65,340 square feet in Setia City for RM8,820,900 to be developed into a commercial office building.

In the Port of Tanjong Pelepas, its warehousing capacity of 460,000 square feet is to be expanded by 400,000 square feet.

In the oil & gas logistics activities, a vessel now known as Onsys Century 1 was purchased for RM15 million in October, 2011. The vessel commenced carrying out spot charter voyages in January 2012.

The 3 actions outlined above will bring much growth to the company in 2012 and beyond.

In the business world of today, more and more companies are going global. This means more & more business for logistic companies.

Every year I pick a stock as my best bet for the year. In 2009, it was KPJ; in 2010, it was TDM; in 2011, it was EPIC and now in 2012 it is CLHB.

The stock is last traded at 1.90.
I believe it will be much higher by the third quarter of 2012. A 50% growth should not be ruled out.

As usual, you buy at your own risk.

Friday, April 13, 2012


More to oil palm than just palm oil


EVERYONE knows that oil palm is grown to produce palm oil. Some 90 per cent of oil palm plantation revenue is derived from the sale of crude palm oil and crude palm kernel oil while the other 10 per cent is derived from other parts of the palm. These figures are expected to be reversed by 2020.
A less well-known fact is that oil only forms about 10 per cent of the total biomass produced by the palm, while the remaining 90 per cent can be further utilised for commercial exploitation in a sustainable manner.

It has been estimated that for every tonne of palm oil produced from fresh fruit bunches, a farmer harvests around six tonnes of waste palm fronds, one tonne of palm trunks, five tonnes of empty fruit bunches, one tonne of press fibre (from the mesocarp of the fruit), half a tonne of palm kernel endocarp, 250kg of palm kernel press cake, and three tonnes of palm oil mill effluent.

Quoting figures from the National Biomass Strategy Blueprint, by 2020, Malaysia's palm oil industry is expected to generate about 100 million dry tonnes of solid biomass.

Currently, a large portion of the biomass from the plantations is left to rot and returned to the field as fertiliser. While this practice is necessary for the healthy growth of young oil palms, there is more than enough biomass that can be used for more lucrative purposes.

The National Biomass Strategy 2020 lays the foundation for Malaysia to capitalise on its biomass by channeling 20 per cent of the solid biomass into higher value downstream uses instead of using it as low value downstream uses like fertiliser. These uses can broadly be divided into energy generation, biochemicals and structural materials.

The biomass from oil palm fronds, palm kernel shells and empty fruit bunches can be used as feedstock for biomass boilers to generate electricity. The renewable energy generated may be used on site or sold to power generation companies, thereby, reducing energy costs and increasing the revenue of mill owners.

According to industry sources, a mill capable of processing 60 tonnes of fresh fruit bunches an hour can also produce 3MW of electricity an hour from the empty fruit bunches once the fruits have been removed.

Furthermore, the anaerobic treatment of palm oil mill effluent produces biogas which can be used as a substitute for natural gas for use in factories and homes.

In contrast to first generation biofuels and bio-based chemicals - using food crops such as sugarcane, cassava or corn as feedstock - emerging second-generation technologies are exploring the use of oil palm biomass. One oil palm trunk produces about 200 to 250 litres of sap which has a sugar content of eight per cent, up to a maximum of 18 per cent with proper ageing. This sugar can be fermented into ethanol which is emerging as an alternative biofuel and bio based chemicals. Further research is also being done to convert the lignocellulosic materials from the oil palm fronds into bio-based chemicals.

Currently, oil palm trunks are used to produce low-grade lumber. Up to 40 per cent of the trunk wood can be peeled for making plywood and about 40 per cent of the frond material can be crushed into dust or smaller particles to make medium-density fibreboard and particleboard.

However, these processes are energy intensive and at FRIM we have found more cost effective processes to convert oil palm trunks into engineered lumber, i.e. MYScrim-OPT which is intended for use in manufacturing furniture, doors, floorboards and interior design accessories.

More intensive research is being conducted to develop the patented MYScrim-OPT technology further to enhance its properties so that the final product is strong enough to be used as building materials. This will not only create added value from by products from the palm oil industry but also reduce our dependence on our fast depleting forests for wood.

Plantation companies with sufficient capital which have invested in downstream activities have benefited from the higher returns gained from moving further up the palm oil value chain. The next step will be to explore and exploit other aspects of the oil palm. The high investment in these large commercial scale technologies will be justified with the right kind of regulatory framework, coupled with incentive packages provided by the government.

Coordination between the plantations and the mills is required to mobilise the commercial part of the oil palm biomass. Biomass utilisation centres will need to be centralised to be closer to the centre of production in order to lower the logistics and handling costs which otherwise can render unprofitable efforts.

While the technology is available, the high investment in these technologies means that only highly capitalised companies, typically, public-listed plantation entities, are able to afford them. The bigger boys with large capital bases and professional management teams like Sime Darby, Felda Holdings and IOI are in a better position to take on the risk and the rest will, hopefully follow.

The writers, Datuk Dr Marzalina Mansor & Dr Wan Tarmeze Wan Ariffin, are from MYScrim Flagship Project, Forest Research Institute of Malaysia.

Monday, April 02, 2012

Foreign investors find gems in Malaysian stocks

By Goh Thean Eu

Overseas investors were net buyers of Malaysian stocks for 31 consecutive trading days, a sign that the current stock market rally might still have legs to run, said analysts.
Based on Bursa Malaysia data compiled by Business Times, it was revealed that foreigners were consistent net buyers since February 17 – during which foreign fund managers bought over RM13.72 billion and sold RM9.34 billion worth of stocks, which represented a net buying of about RM4.3 billion.

Last month, foreign fund managers were net buyers of more than RM3.4 billion worth of stocks, making them the net buyers for the
sixth consecutive month.

“This basically means improved risk appetite by foreign investors in anticipation of stronger emerging market economy and stronger ringgit in the second half this year,” said Dr Nazri Khan, vice-president and head of retail research of Affin Investment Bank.

Over the past 31 trading days, overseas investors’ interests have helped to push the stock market by almost three per cent – from the opening of 1,550.49 on February 17 to the alltime high of 1,596.33 point last Friday.

During the period, 195 companies saw their share prices rise to their 52-week high, of which 53 companies had market capitalisation of more than RM500 million. In the same period, 46 stocks were traded at their 52-week low.

Five FTSE Bursa Malaysia Kuala Lumpur Composite Index component companies, namely Maxis Bhd, Telekom Malaysia Bhd, Bumi Armada Bhd, British American Tobacco Bhd and Sime Darby Bhd, also hit their 52-week high over the past 31 trading days.

None of the major banks hit its 52-week high during the period.

The benchmark FBM KLCI has risen by 4.28 per cent so far this year, which is far below what the region has performed.

The stock markets in Singapore, Thailand, Indonesia and the Philippines have rose by between seven per cent and 16 per cent this year. The MSCI Asia ex-Japan Index has gained 12 per cent year-to-date.

“I believe overseas investors are expecting Malaysian stocks to do some catching up after under-performing for some time,” said OSK Research Sdn Bhd head of research Chris Eng.

Although the benchmark index has hit the all-time high, analysts believed that stock prices were still reasonable. Currently, the FBM KLCI is trading at about 16.5 times price earning ratio. It is higher than Singapore’s market of about 10 times PE.

“I think we are still reasonably priced. Indonesia used to trade at about 30 per cent discount to our market, but it is now more expensive than us,” said Eng.

Indonesia’s Jakarta Stock Index is currently trading at about 21 times PE, while Thailand’s benchmark index is trading at about 15 times and the Philippines benchmark index at about 18 times.

Sunday, April 01, 2012

Equities The Better Choice

2012 is going to be a great year for equities. Keep cash and not stocks at your own peril. Read more.