One rich generous printing and plantation son

One rich generous printing

and plantation son

Last year RHB Bank created history by being the first bank in Malaysia to be featured in a commemorative stamp collection in conjunction with its 100th anniversary celebrations. The stamp collection captured four historic moments in the bank's history. The collection sets yet another milestone by being the first stamp to be printed in a diamond shape, a reflection of the Group's iconic logo.

A total of 1.2 million stamps, each valued at 60 sen, were printed while the first-day cover and folder were each priced at 50 sen and RM5.50 respectively. The items went on sale at Pos Malaysia offices nationwide from Nov 23, 2013.

So who printed the stamps for Pos all these while? Any Tom, Dick and Harry company?

No. The company is called Fima Corporation Berhad (Fimacor), otherwise known as the cash-rich son of its also cash-rich mother Kumpulan Fima Berhad (Kfima). It is believed that Fimacor is also printing stamps for a dozen other countries. True, both mother and son are loaded with cash in their kitty that are getting more and more heavy every year.

So much so has been said about these two companies that what I want to say will sound like recycled comments only. So perhaps the writer will share his personal's "association" with Fimacor and how he became a shareholder as well.

Fima Corporation Berhad (Fimacor)

Initially, what I liked about Fimacor was its consistent and secure printing business and to a smaller extend, business property management, some cash in its kitty and its average dividend payout.

In 2007, when Fimacor decided to venture into plantation business in Indonesia, I was pessimistic about this new venture. You see, I am the type of investor who like to invest in company that knows their main business best and do not simply diversify into another different business. I was worried that this new plantation business would not do well and would be a drag to its good balance sheet, thus affecting the regular good dividends.

As a matter of fact, if I am not mistaken, Fimacor took some loan for the purchase of the plantation business.

Lady luck must be on Fimacor's side as crude palm oil's price was on a steady uptrend after the purchase. Consequently, when Fimacor's quarterly profits were announced, the profits was more and more as the result of the good contribution from the plantation business. So much so that until today, Fimacor is sitting on a huge cash hoard of RM225 million according to its latest 2nd Qtr 2014 result's announcement.

Even today, plantation remain an extra good revenue and profit for Fimacor even though CPO is trading just above RM2,000.00. Managing Director Roslan Hamir said as long as CPO price stays above RM2,000.00 per tonne, it is still ringing in profit for Fimacor. At the time of posting, CPO's price has been on an uptrend again.

Today, the plantation division contributed about 30% to the group revenue.

Fimacor is also on the lookout for acquisition opportunities to grow. Fimacor announced that the Proposed Acquisition by Cendana Laksana Sdn Bhd, of 2 parcels of agricultural leasehold lands held under HSD 398, Lot PT 757 P, Mukim Tebak, Daerah Kemaman, Negeri Terengganu measuring approximately 1,000 acres & PN 7602, Lot 2925 (Formerly HSD 2406, PT 1037P), Mukim Tebak, Daerah Kemaman, Negeri Terengganu measuring approximately 940.73 acres was completed on Jan 6, 2014.  Fimacor also plans to buy plantation land in Papua New Guinea.

Excellent dividends paymaster

The last few years has been exceptionally good for Fimacor. Its last five years' average eps is 81 sen which is considered very high for a company with a share base of only 82,426,810.

Predictably, on Nov 26, 2013, Fimacor reported an eps of 23.78 sen for its 2nd Qtr September, bringing its half year's total eps to 41 sen.

More fantastic for its shareholders is the continuous increasing of dividends payout from the last five years. Gross dividend for 2009 was 17 sen and increased to a high of 38.5 sen for 2013. At the current price of around RM6.30, a 38.5 sen dividend indicates a dividend yield of 6.1%. Fimacor recently paid a single-tier interim dividend of 15% payable for the year ending Mar 2014 on Dec 27, 2013.

At its last Annual General Meeting, Managing Director Roslan Hamir said that Fimacor has always maintained dividend at the same level compared with previous financial year. Isn't this good news for dividend lovers? People especially like me!

Huge cash hoard of RM225 Million

as at 2nd Qtr September 2013

for financial year ending March 2014.

The current price of Fimacor is RM6.30 (at the time of writing). It is  backed by its huge cash hoard that amounts to a cash per share of RM2.80. Stripping out this cash per share of RM2.80 and investor would only be paying about RM3.50 for each 1,000 Fimacor share that would imply a Price Earning Ratio of less than 4.5 only!

Supported by its steady consistent printing business, property management and its plantation business, its earnings are quite a predictable one. If CPO price is on an uptrend, you can bet Fimacor will report an even higher profit.

CPO price has been trading higher and higher during the last few months and looked set to maintain the pace for the coming months. This should brings more smiles to the shareholders of Fimacor and Kumpulan Fima (Kfima) eventually.

From time to time since several years ago, there were some reports about the merger between its parent company Kfima and Fimacor. Each time such news surfaced, there would be some spike up in the shares prices of both companies.

I am personally at a loss to explain why the merger does not take place or why Kfima does not take a privatisation exercise on Fimacor. If a privatisation exercise is to happens, how would the minorities shareholders of Fimacor react? There must be a big massive dividend payout to appease the minorities shareholders. Also take note that as Kfima holds a 60% stake in Fimacor, they would also benefit from this dividend payout.

Time will tell whether a merger between these cash-rich mother and son companies perhaps involving some shares swap would take place or when a privatisation exercise is announced. Whatever it is, it must result in a win-win situation for both companies.

I was "lucky" enough to be the one of early birds' investor of Fimacor when they were just focussing on their printing business and property management.

I bought 2,000 shares of Fimacor at RM1.42 on Oct 21, 2004 and again another 2,000 shares of Fimacor also at RM1.42 on Oct 26, 2004. To date, the writer has received dividends totalling around RM8,000.00 plus which is more than his original capital investments of RM5,722.36 in Fimacor.  Which means the present 4,000 shares of Fimacor are effectively FREE!

What a good son Fimacor has turned out to be for Kassim. Dishing out regular good dividends all those years and many more years to come. Can we call it another "next mini Public Bank company"? Again, only time will tell.

The writer intends to keep this generous son with a big heart for as long as possible.

You know why, right?

One "Layman" asked me about Suria Capital.

Seriously, there are over 1,000 companies in Bursa Malaysia. Many companies I do not know what they are doing unless one is to go the internet to search. I have always thought that Suria Capital was mainly involved in port business.

OMG! Suria Capital is involved in so many business. It is an investment holding company. The Company, through its subsidiaries, operates in five segments: investment holding, including investments in fixed deposits and short term investments, property development, including development of residential and commercial properties, port operations, including provision of port and related services, distributor of port cargo handling equipment and related spare parts, and provision of equipment maintenance services, logistics and bunkering, including the provision of bunkering and related services, and contract and engineering, which is engaged as construction contractor and the provision of project management and technical support services.

Judging by the movement of its share price of 62 sen recorded on Mar 16, 2009 to the current price of around RM2.50 (its high was RM2.77 on Dec 2, 2013), the company must be doing quite all right in mostly all its business directions.

Suria also paid interim and final dividends during the last few years although the amount is nothing much to shout about. But at least the company was profitable enough to be able to do so.

I would say a good company to invest for the long term although I do not own a single share of it. Over to you, Layman.