Koon Yew Yin's update on Tradewinds Plantation

I have received an email with the below message from Koon Yew Yin. Previously, I have written a piece entitled, "Tradewinds Plantation may have been cornered". I feel that since I have written that piece, would be good to allow variety of opinions although it may not have been mine.

Basically, I feel that the current situation for TWSP is the question on probability that it will be privatised and if it is at current price of RM4.06 - RM4.07, your loss would be 3 - 4 sen and the trading commissions that comes with it. Additional loss if it is privatised at RM4.03 is of course opportunity costs. TWSP is definitely trading at a discount to its revised book value as provided by analyst - not me. However, I can see that there are quite a bit of plantation land not revalued.

I am of course not able to know for sure what would happen to the stock but I can see that at least 83% are for sure under Syed Mokhtar and parties related to him.


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The safest & best opportunity to make money I know

Koon Yew Yin

16^th Jan 2013

On 24^th Dec 2012 the controlling shareholders announced that they wanted to buy up all the outstanding shares of TWS and TWSP that they did not own, at Rm 9.30 and Rm 4.03 per share respectively.

On 12^th Oct I wrote an article “The most undervalued stocks I know” which was posted on Malaysia Finance Blogspot and KC Lau website when TWS’s price was Rm 6.40 and TWSP was Rm 4.00. TWS and TWSP closed at Rm 9.07 and Rm 4.06 respectively.  Those who bought TWS should be laughing but those who bought TWSP are disappointed because the prospect seems so hopeless.

Since the announcement of take over, I have bought up most of the shares traded. In my opinion, I have never felt safer and better in making money before than now in buying TWSP at Rm 4.06 per share because your potential lost is limited to 3 cents per share if they actually have the right to force you to sell at Rm 4.03. But the potential gain can be a few Ringgit per share.  

Although according to the takeover & merger code, the controlling shareholders can force you to sell at the offered price if they have acquired more than 90% of the total issued shares. But under the same code, any dissenting shareholder can protest and the civil court will have to hear the complaint and pass a fair judgement.  

In March 2012 an analyst from UOB KH wrote an article on TWSP when its share price was Rm 4,80. He had a target price of Rm 7.20. In his opinion the RNAV of TWSP was Rm 19.56 per share and CAGR for FFB production is about 13% for the next 3 years because most of their palms are young. The industry average is between 5-8%.   

Although they have sent out the official offer to buy up TWS on 14^th Jan, they have not sent out the official offer to buy up TWSP. I think they could not find an independent adviser to support their offer. I also think it is most likely that they will raise the offer price to about half of the RNAV ie about Rm 10.

I believe this is the safest and best opportunity to own TWSP to make money because the downside is so small while the potential gain is so great.

I am obliged to tell you that my holding of TWSP forms a significant part of my share investment portfolio.

Koon Yew Yin   

Tradewinds Plantation may have been cornered

This is the upmost top financial blog in Malaysia - malaysiafinance.blogspot.com. To spend real time and consistently update on a daily basis, it has gained my upmost respect. And to have a respected figure, Mr Koon (one of the pioneers of IJM) to contribute it must be something. If you notice my post before, I have much respect for IJM before and now. In fact, IJM was one of my earlier investments. IJM is an epitome of a great construction company in Malaysia that has worked its way through a tough industry being straight and clean.

In a recent article, Mr Koon Yew Yin caused people who followed him in buying Tradewinds to profit as it is trading close to RM9.00 now.

Today, however - there is a reiteration of Tradewinds Plantation (TWSP) to be way undervalued. Based on underlying asset value, there is no doubt about it. Sometimes though, it may not be in the asset value. We are holding stocks in a company controlled by one of the shrewdest businessman in Malaysia. Currently the group among Tradewinds (the parent) already hold 73.70% of TWSP. Just to highlight some of the most recent numbers which I can find.

92 holders control 95.84% (16.27% + 79.57%) of Tradewinds Plantation. This is almost unprecedented. Another stats below:

Part of First page of Top 30. Top 6 holding almost 90%

How much does the Top 30 hold?

Part of Top 30

The Top 30 hold 93.71% of TWSP. To invoke a compulsory acquisition of RM4.03 per share of TWSP (from mandatory), it needs to achieve 90% threshold which I think is not too difficult. In fact, if you search further EPF has sold to below 5% sometime around July this year. It could mean the insiders were buying up the EPF's portion.

I think this stock is already cornered. Tradewinds the parent is being offered at price probably below its substantial Net Asset Value. TWSP is to be bought at way below its real value and there is not much we can do about it. Another thing in TWSP we noticed, it is very loosely traded now which means probably the more than 90% have already gone to hibernation while waiting for the Tradewinds exercise to be completed - then only a matter of time before the full acquisition of TWSP to be completed. Even if TWSP may have much higher underlying value, it is probably tough for us to get to enjoy that.

The reason I am posting this is to allow some investors be aware - I think this is important enough for some to know. I may be wrong - there's no harm in highlighting.

Wanted to highlight in S Dali's blog but this is too much to highlight in the comment section.