Thursday, November 24, 2011

TDM Results (RM3.29; TP: RM5.40): Spectacular! The best quarter achieved thus far!

TDM results just came out. It was the best quarterly results that TDM had achieved thus far and even beyond my expectations. Net profit for 3Q2011 at RM51.5mil, an increase of 82.1% yoy and 60.9% qoq. The rise in net income was due to double-digit production growth of CPO and PK by 25% and 13% respectively coupled with higher CPO and PK prices by 24.2% and 54.5% respectively. Net cash level rose to RM212.6mil (RM0.98/share) in 3Q2011 from RM155.4mil in 2Q2011.

YTD 9M net profit was already at RM112.5mil. Another RM50mil net profit for 4Q2011 would boost its net profit to surpass RM160mil for the whole year of 2011 with net cash level to surpass RM250mil by the end of this year. This translates to EPS of 67.6 sen and net cash per share of RM1.06.

In view of the spectacular results, fair value should be even higher at RM5.40, based on EPS of 67.6 sen and PER of 8x. Potential upside would be 64% from current levels. At current price of RM3.29, it is trading at a ridiculously low PER of 4.8x!!! This is perhaps the cheapest plantation counter I’ve encountered thus far!!

Market Data: 
Share price: RM3.29
Shares issued: 236.8 mil
Market Cap: RM779.06 mil
Net cash: RM212.5 mil/RM0.90 per share
PER 2011: 4.8x
PBV: 0.94x

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