Tradewinds Plantation is a plantation player and main income contributor to TWS (M) Bhd, a major commodity producer in Malaysia. Palm oil business is still their biggest driver, but we should a better and stable income through their diversification into rubber plantation business, upstream in 2008 and downstream through acquisition of Mardec Bhd, in coming years. I think its a good venture as both of commodity, rubber and CPO has a very promising demand. Been to their rubber plantation area at Padang Terap last week, looks very promising and well managed. Looking at their past track record, the income and margin was very volatile which is quite normal for commodity business, but with their recent busines countermeasure,, we should a slight lesser setback during depress time.
However, i think their balance is sheet is so-so and not as attractive as SOP, but the growing land bank and sizable reserve land and good mixture of mature and immature plant, kinda safe the company and im expecting an exciting income growth in near future. Land under rubber development business can be considered small but modest at current size, but the management already highlighted that they will grow more further, along with company progress .
I think below RM3.00 would be a good entry already, but looking at current economic condition, i will only consider buying into it at price below RM2.50.
Current Price = RM3.58
NTA = RM 3.09
PE = 8.3
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