Hap Seng Plantation – worth a deeper look

[i4value]

From a ROE perspective, the return of Hap Seng is in between that of KLK and BPant. It is better than BPlant but not as good as KLK. These are my 2 reference Bursa Plantation companies where I have detailed fundamental analysis.

The comparative ROE trend and share price trend shows a good link. Prices are currently low relative to the ROE. If you are hunting for stocks with price-fundamental discrepancy to invest in, this is one company worth a deeper look.

[i4value]

Is Hap Seng Plantations cheap based on Boustead Plantation?

I just received my Independent Advice Circular on the mandatory takeover offer for Boustead Plantation.

The thing that stood out was that the Revised Asset Value of Boustead Plantation was estimated at RM 2.60 per share. Contrast this with its Book Value of RM 1.29 per share. You can see that the Revised Asset Value is double the Book Value.

Going by this metric, can you take the Book Value of all the Bursa Plantation companies as the floor value?  Or at least this applies only to those with large plantation land in Malaysia rather than in other countries.

By this measure would Hap Seng Plantations with its share price of RM 1.75 per share be cheap given its Book Value of RM 2.41 per share?

Having said that, Asset Value provides psychological comfort as companies are not going to sell their assets and return the monies to shareholders. Instead, even the ones with incompetent management will try to run the business (and of course in the process destroy shareholders value).

Furthermore, shareholders cannot depend on luck by hoping that the company will be acquired by another.

Moral of story? I still prefer to rely on Earnings base valuation