Are you tempted to buy Jaya Tiasa?

Many investors are tempted to buy Jaya Tiasa simply because it share price has been depressed for more than 5 years and the company owns the largest forest land and the biggest plywood factories in Malaysia. Moreover, its planted oil palm plantation has been expanding in the last 10 years. It is so cheap. The open market value of its plantation alone is more than its market capitalisation.

The chart shows that JT has been down trending for more than 5 years which means that there is something seriously wrong with the company and the oil palm industry. There is a constant oversupply of CPO and all the plantation companies are planting more and more.

JT has been using all its profit from timber and plywood to plant oil palms. As a result its acreage keep increasing. Unless it stops planting and show EPS growth, its share price will continue to fall. If you buy JT, you do not know how long you have to wait for its share to go up.


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