Hello October

G’day everyone. This shall be my very first posting for the month of October. Many have considered October as ‘month that is filled with bad omens’ since this very month has witnessed numerous historical crashes in stock markets.

Nevertheless, I’m keen to look at one particular long-established company, Hap Seng Plantations Holdings (the Company  is engaged in cultivation of oil palm and processing of fresh fruit bunches carried out in Malaysia).

It appears to be trading in range bound, with its recent marginal uptrend in its 20D EMA. Whether the stock’s momentum will continue, it is dependent on whether it can break the next key resistance point at RM2.73

Hapl_TA.png

There have been pockets of major activities in its trading volume, which may be potentially attributable to recent accumulation in the shares of the Company by Lembaga Tabung Haji:

HAPL_Insiders.png

As shown below, Hap Seng Plantations tends to be ‘less reactive’ to the movements of the CPO. As such, we would expect a generally muted correlation between the Company and CPO.

Hapl vs CPO (multiple graph.png

Strictly For Educational / Illustrative Purposes Only

Based on a simple regression analysis (with R-square at 0.38) between the share price of Hap Seng Plantations and CPO, the current share price (RM2.67) of Hap Seng Plantations appears to be fairly valued if compared to its forecasted value of RM2.61 (with a 95%-confidence band of RM2.14 – RM3.07)

HapL_Oct17.png

We also run a regression analysis between P/E ratio of Hap Seng Plantations and CPO. Although the statistical relationship appears weak, the current P/E of Hap Seng Plantations of 14.17x is not unreasonable if compared to the forecasted P/E of 15.68x (with a 95%-confidence band of 8.3x-23.1x).

HAPL_PER vs forecast.png

As shown in the frequency distribution of the Company’s P/E, the current P/E ratio of the Company appears to be not unreasonable as it is below the mean PE (since 31 Dec 2008).

HAPL_normalitytestPER.png

The above analysis is a simple high-level desktop analysis. One should conduct further research and background study of the Company.

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