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Overweight Plantations Shares

The following is an extract from RHB’s article of 17th June 2014 quote: We believe palm oil should start trading higher, especially after its price has recovered above the MYR2,400 level. The current hot and dry spell in Malaysia, due to the southwest monsoon that is expected to persist until September, will hurt palm oil production – much like in Jan-Feb this year. Also, tensions in Iraq are boosting crude oil prices and biodiesel margins, which will increase demand. Maintain OVERWEIGHT.

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If you study the above table carefully you will notice that Jaya Tiasa has the best profit growth rate. Its P/E ratio for 2014 and 2015 are 15.5 and 11.4. Moreover, its EV/ha is about the cheapest.

After having read this RHB’s article, I realize that I have to write this article to correct the wrong impression which I may have given at my recent investment seminar on 1st June.

During the seminar I said that no share  could continuously to go up or come down for whatever reasons and we must take advantage of this phenomenon to make money. I said as an example, Jaya Tiasa, had gone up about 30% from Rm 2.10 to Rm 2.72 in the last 5 months. I sold some to take some profit and to reduce my margin loan. I also said that you could always back Jaya Tiasa when it was cheaper.

Now is the best time to buy back Jaya Tiasa.

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