SHAL.N0000 ( SHALIMAR (MALAY) PLC )

[yellow knifeTop contributor]

Many new comers to this forum argue to focus only on shares. Unlike in other equity related forums we talk a lot about other areas like Politics, Geo-Politics, Economics, Country Analysis, Book Summary, Movie list etc.

All these threads are useful for a good investor.

The share we are going to discuss shows the relevance of what we talk here.

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We have seen efforts of creating monopoly in Sri Lanka and in following threads the relationship is clearly shown.

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Then we have discussed about popular myth of Economists who want to see the end of Monopoly and in somewhat political related thread created after FM talking about crushing crony capitalists and aiming DP , Tile and Aluminum is discussed then.

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Then we talked about different countries and Malaysia was included to that..

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We talked about bubbles created in different commodities under this thread.

 https://forum.lankaninvestor.com/t6435-bubbles?highlight=bubbles

Evan in following we looked at the relationship between crude oil and Palm oil.

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So collectively we have created a forum where many aspects were discussed with different views. Such background will improve our ability to understand what is happening with this share now.

[yellow knifeTop contributor]

The Board of Directors of this company has taken a decision to convene an EGM to get the consent of us to sell of its Plantation and to distribute its proceeds to shareholders.

A business is created with Going Concern . If so why this alternative is proposed for Shareholders approval ?

[yellow knifeTop contributor]

Carson's Group is well managed and previously we have seen similar effort when this group decided to sell Watapota Investment or WAPO..

Like now the issue was made well aware to the customers...

[yellow knifeTop contributor]

Now the issues behind the decision to sell the land of the Plantation in Malaysia

1. Sharp decline in Crude Oil prices, and Crude Palm Oil prices (CPO) reaching five year low over last 1-2 years.
Thus CPO was trading lower than average prices recorded in the previous price cycles.

2. Along with this trend other edible oil prices too plummeted. Soybean oil and Sunflower oil too fell down. The decline in global crude oil prices to had an impact on the CPO prices, as the demand for Palm Oil based bio-diesel is affected by lower crude oil price regime.

We have seen the reverse of above in 2008 and the bubble of commodity busted in 2008..

3. Rapid infrastructure and commercial developments taking place near the location of the plantation has increased the commercial value of the plantation as opposed to its value based on agricultural usage.

4. El-Nino phenomenon impacted the crop production both in Indonesian as well as certain parts of Malaysia during the year under review. It resulted in drop of production.

5. One option is to grow like an octopus, extending the tentacles of the group and merge three other Malaysian Plantation companies of the Group.

With this and further acquisition of agricultural lands will improve the economies of scale and enable the company to survive and thrive.

Yet the Malaysian authorities have prevented that by regulatory restrictions prohibiting acquisition of agricultural land in the Selangor region of Malaysia by foreign entities.

[yellow knifeTop contributor]

Above factors had compeleld the company to sell the land .

Lets look at Selangor region of Malaysia

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The state of Selangor has the largest economy in Malaysia in terms of gross domestic product (GDP) with RM 128.815 billion (roughly USD 42 billion) in 2010^[4] making up 23% of the total GDP of Malaysia.^[5] This state is also the most developed in Malaysia with good infrastructure such as highways and transport. The state also has the largest population in Malaysia, with a high standard of living and the state's poverty rate is the lowest in the country

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[th]Religion in Selangor - 2012 Census^[13][/th]

religion			percent
Islam			57.9%
Buddhism			24.4%
Hinduism			11.6%
Christianity			3.8%
Chinese Ethnic Religion			0.5%
Other			1.4%
No religion			0.4%

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Batu Caves, one of the most popular Hindu shrines outside India, and is dedicated to Lord is located in this region

[yellow knifeTop contributor]

The other option instead of selling was to construct a small palm oil mill.

For that to be feasible minimum of 2,500-3,000 hectares of plantation is required to economically operate a small oil palm.

Yet even the combined acreage of all oil palm plantations of the group is less than 1,500 hectares..

[yellow knifeTop contributor]

Many countries take steps to protect domestic agriculture by such rules on land acquisition and by subsidizing local farmer.

WTO is the organization to prevent such situations and to ensure fair trading. Yet the biggest culprit of protectionism is US. It protect its cotton farmer to such and extent that the countries with comparative advantage to grow cotton have become poorest nations ...These four poor nations are known as C4 ..

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On December 3, China and a group of four major cotton producing African countries (C4) of Benin, Mali, Chad and Burkina Faso, jointly issued Press Communiqué of Ministry of Commerce of the People's Republic of China and C4 Board of Trade on Cooperation in Cotton Industry under the WTO Framework in Bali, Indonesia, and ...Dec 6, 2013

China and C4 Countries of Africa Jointly Issue Press Commun

[yellow knifeTop contributor]

Back to our subject..Revenue and PAT of the company

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[yellow knifeTop contributor]

EPS comparision

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[yellow knifeTop contributor]

Market value often kept high due to illiquidity of the company.

An announcement was made on the CSE on 1st December 2015 on the inability of the company to ensure that its public holding is maintained at the minimum level required.




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[yellow knifeTop contributor]

Dividends of the company

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[yellow knifeTop contributor]

Surprisingly when the earnings drop share price has risen to reach fantastic PE ratios..

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[yellow knifeTop contributor]

Crude Oil price and CPO price moving in parallel

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[yaka]

awaiting the next posts...... really interesting way of talking stocks.... thanks for the knowledge you add in all the threads.

[yellow knifeTop contributor]

Thanks for your encouragement Yaka

[yellow knifeTop contributor]

Amidst all these one very interesting factor of Oil Palm industry is its Net profit Margin.


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PAT/Revenue*100 is what I meant as Net Profit Margin... When compared with other industries, this profit margin is really high in Palm Industry. Shalimar's Profit Margin has come down, yet compared to other industries is remaining at a very attractive level.

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[කිත්සිරි ද සිල්වාTop contributor]

Heard in the great Grapevine that some big foreign interests are mulling of shedding most of their holding soon.

Amidst all these one very interesting factor of Oil Palm industry is its Net profit Margin.


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PAT/Revenue*100 is what I meant as Net Profit Margin... When compared with other industries, this profit margin is really high in Palm Industry. Shalimar's Profit Margin has come down, yet compared to other industries is remaining at a very attractive level.

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