Monday, November 4, 2013

Kretam - stronger earnings growth

It has laid out plans to cultivate stronger earnings growth.

The Sabah based company has invested rm150 million to expand its refinery capacity for both edible oil and palm oil biodiesel.

Should things pan out as planned, the refinery division would contribute half of its earnings in two years time.

Kretam’s 19763ha plantations, sitting along the oil palm plantations prime belt in eastern Sabah, have not been fully reflected in the company fully share price (04 Nov 2013). Based on the value of rm75000 per ha, its plantation land alone is worth rm1.47 billion.

Based on the value of rm75000 per ha, Kretam’s plantation land alone is worth rm1.47 billion.

It does not have a dividend policy. The company’s priorities in the past three years were debt restructuring and replanting.

Its plantation has a rather balanced age profile. Prime age trees (6 to 15 years) make up 56% of its planted that area, while young trees, 20 years.

It is worth noting that Kretam’s balance sheet has a share premium reserve amounted to rm158 million and a revaluation reserve of rm31.44 million which adds up to rm189 million.

It is unknown how the management would leverage the sum.

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Please note that all data given are merely blogger's opinion. It is strongly recommended that you do your own analysis and research before investing.