Fimacor - still strong,
steady and generous
Owning business or assets especially in another country is not always
assumed as safe. Many times that particular country's government could see a
change of hands and the new government will sometimes decide to change the
current rules set by the previous government.
Such change of rules sometimes can seriously affect a wide spectrum of
people and business in the countries, But sometimes even without any change of
new government, the existing one could still
to amend or over-ride existing rules or agreements done years back due
to certain reasons.
Recently one of my companies, Fima Corporation Berhad (Fimacor) was experiencing such
shocking amendments of rules/agreements of their plantation business in Indonesia.
Fimacor's 80% owned PT Nunukan Jaya Lestari (PTNJL) has a lease hold
term that expires in 2038 and covers 49,356.75 acres of agricultural land in
Nunukan Regency, East Kalimantan, Indonesia. Between 2006 and 2007, Fimacor
paid a total of RM 96 million to acquire PTNJL.
The plantation business in Indonesia accounted for around 30% of the
group's revenue since the last eight financial year. But during these last
eight years, its total profit easily exceeded its original investment of RM 96
million. It has turned out to be a good investment after all.
But now the Indonesian government has revoked its 80%-owned Indonesian
subsidiary's cultivation rights, reasons were it had been improperly issued
resulting in the overlapping of some of Fimacor's planted areas with forestry
areas.
Fima has started legal proceedings to challenge the ministerial order.
But what will the outcome be? If it loses, the loss of this will seriously hurt
its earnings although it still has a stable security printing business to rely
on. (But then again, isn't it better to enjoy two earnings than one?).
Fimacor was featured twice before here. I first wrote it on Jan 20, 2014
: One rich generous printing and plantation son and later on July 2014 :
Fimacor is running faster than Kfima. My original investment of 4,000 shares in
2004 has now ballooned to 12,000 shares following its bonus and split exercise
in 2014.
Total dividends received to date is around RM 11,000.00 which has
exceeded my original cost of RM 5,722.36. Fimacor remains a top dividend class
paymaster. Between 2011 and 2014, (before its bonus and split exercise), its
average dividends were RM 346 per share. For 2015 and 2016, it paid RM 125 per
share each year, but when I calculated my 12,000 shares x RM 125, it is a total
of RM 1,500.00 per year.
Although my investments are free, it doesn't mean I don't have to worry
about what will happen to my investment in Fimacor at all. I am in a dilemma of
how the outcome will be? If I don't sell now and it loses the Indonesian plantation
business, its share price will easily fall below RM 2 and beyond. What if it
wins? I think in the event it wins, it will not have any effect on its current
price of RM 2.15 plus minus range.
On the other hand, had it been the other way round that the plantation
business accounted for 70% of its revenue instead of 30%, meaning the security
printing business just accounted for 30% only, I believe its share price would
have fallen to below RM 2 the moments the news came out.
Right now, its seems to have priced in this revocation news already. I
believed many minorities shareholders like me are keen to know the outcome
although it may take months or more than that when it comes to counter legal
proceedings of this type of case.
The goodness at the moment is it is still business as usual there. The
icing on the cake is palm oil price has
been trading rather higher during these few months.
Interestingly, Fimacor had just announced a set of impressive results
for its 2nd Quarterly Report (July - September) for Financial Year ended March
2017.
Fimacor earned 7.32 sen, together with its 1st Quarterly of 5.93 sen,
bring its total half year earnings to 13.25 sen. On an annualised basis will
bring it to around 26 sen. A first interim dividend of 5 sen has been
announced, payable on Dec 30, 2016. I am confident a final dividend of at least
7.5 sen will be rewarded to shareholders when it announces its 4th Quarterly
Report result somewhere in May next year.
For dividends lovers like me, Fimacor remains a share I would like to
keep for more years as long as the dividends are banked in to me at this kind
of rate which is easily more than banks' fixed deposit rate.
A New Wonderful Experience
I have a true confession to share. Recently I decided to abstain from
reading the share price of Bursa Malaysia. I wanted to know how it the feeling
would be by totally not knowing the changes of my shares. So the only sure way
is not to check on the gainers list or from the newspapers.
But I continued to keep abreast with current business issues by reading
the business pages, The Edge and Focus Malaysia. I continue to check on the
results and dividends announcement as well.
So what was the feeling like to be? Well, you never try you never know.
I can only say it is something like peace of mind when one doesn't really know
what is happening to the share price.
That is why I did not post any update on my Kassim's Basket of Defensive
Stocks table. Incidentally the day I abstained from knowing the share price was
on Oct 21, 2016. It was a day I started to see life differently after my
possible near miss day on Oct 19.
Thank You so much
For those who wished me well after reading my previous blog, I like to
say thank you so much. They were a few friends who called up to ask. I am doing
fine. I have decided to increase my morning exercise more times rather than
confine to my usual Saturday and Sunday football games only.
