Investment Analysis

Topics: Palm oil, Oil palm, Malaysia Pages: 15 (2998 words) Published: February 24, 2011

Faculty of Business and Management

BBAP 4103





1. Plantation Industry Analysis
1. Plantation History4
1. Industry Life Cycle5
1. Competitive Structure in Industry5

2. Company Analysis
2. BLD Plantation Berhad5
2. Company Background6
2. Financial Statements6
2. Value of Company7
2. Reason of Choice8

2. Sarawak Oil Palm Berhad9
2. Company Background9
2. Financial Statements10
2. Value of Company11
2. Reason of Choice12

2. Tradewinds Plantation Berhad13
2. Company Background13
2. Financial Statements13
2. Value of Company14
2. Reason of Choice15


1. Weighted Value of Investment16
1. Expected Return on Portfolio16
1. Portfolio Beta17
1. Comment on Portfolio Beta18

1. Rationalization of Investment19


1. Risk and Return Concept20


Appendix 1:BLD Plantation Berhad Financial Statements

Appendix 2:Sarawak Oil Palm Berhad Financial Statements

Appendix 3:Tradewinds Plantation Berhad Financial Statements



1. Plantation Industry Analysis

1. Plantation History

The oil palm tree originates from West Africa where it grows in the wild and later was developed into an agricultural crop. It was introduced to Malaysia, then Malaya, by the British in early 1870’s as a decorative plant. In 1917, the first commercial planting took place in Tennamaran Estate in Selangor, laying the foundations for the vast oil palm plantations and the palm oil industry in Malaysia.

The cultivation of oil palm increased at a fast pace in early 1960s under the government’s agricultural diversification program, which was introduced to reduce the country’s economic dependence on rubber and tin. Later in the 1960s, the government introduced land settlement schemes for planting oil palm as a means to eradicate poverty for the landless farmers and smallholders.

Today, 4.49 million hectares of land in Malaysia is under oil palm cultivation, producing 17.73 million tonnes of palm oil and 2.13 tonnes of palm kernel oil. Malaysia is one the largest producers and exporters of palm oil in the world, accounting for 11% of the world’s oils & fats production and 27% of export trade of oils & fats. The industry provides employment to more than half a million people and livelihood to an estimated one million people.

1. Industry Life Cycle

Palm oil is an important and resourceful raw material for both food and non-food industries, which contributes to the economic development of the producing countries and to the diets of millions of people around the world. Driven by ever increasing global demand for edible oils, the past few decades have seen rapid expansion in the production of palm oil the tropics.

1. Competitive Structure in Industry

As in the past, the competitive edge which was the driving force behind the dramatic growth of the industry will continue to be a vital factor for its future development. At the same time, other competing oils have over the years improved their cost competitiveness through new planting materials and processing technologies.

2. Company Analysis

2. BLD Plantation Berhad

BLD Plantation Berhad (‘BLDPLNT’) was incorporated in Malaysia as a public limited company under the Company Act 1965 on 19 October 2001. The Group has the authorized share capital of RM500, 000, 000 made up of RM1.00 ordinary shares each. Issued and Paid-up share capital is...
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