the land isn't being fully planted. its going phase by phase. so far more than half of the 10,000 acre is being planted.
the land now is still fairly cheap. After a few years the land price will appreciate.
Not every piece of land is suitable for oil palm plantation, and this piece of land is suitable for oil palm.

At the maturity of this scheme, im sure the price will appreciate much higher than the purchased priced, 23 yrs is a long time and allows things to progress steadily. Finding a buyer wont be a problem, because countries suitable for oil palm is only malaysia, thailand and indonesia. whereby malaysia and indo is mostly producing it.

Malaysia produces the best oil palm so far, and oil palm is a consumable product to the world population. Oil palm is not expensive, doesn't cause transfatty acid, doesn't require hydrogenation process to extend its shell life. Its naturally very safe to use. Unless another alternative is being discovered, oil palm remain as the best solution up to date and in the near future.

so, sellin the land in the near future, or the land being appreciate wont be a big issue, many big corporations out there would snap it

Is the 8% return nett of all expenses, and how often is it paid. The last time my friend invested in such a scheme, the returns were only paid some years later after he gave up some of the returns as discount. That was a different developer, And I still see some signage at a building near the palace of the golden horses that assures 7% solid returns for the first three years, which has been lying uncompleted for the last couple of years. Wonder what happened to the investors.

its a fixed 8%. no management fees charged during the first 3 yrs.
4th yr onwards, 0.1% will be charged for the management fees.

example: RM5500 x 0.1% = RM5.50

its paid every year february, and no other deductions tat i known of.
im not sure of the building there, but some projects is going on im juz not sure wat are they.

Actually, it is the other way round, finding a buyer for a land bank is easy, but not the trust like this scheme. It is like owning a piece a land but a bit different as the land title is not in your hand. Contradict to the thought, yes, big corporation will snap the land banks, but not a piece of divided 1/4 acre land.

Basically, it is like owning a land, but not actually own it, it is different in details, please get it right. Basically if you want to liduidate, you are selling the trust that you owned, not actually the land. The buyer (from you) can't use the land at all except participate into the trust scheme.

Don't need to post the palm oil doesn't cause tranfatty acid issue to lure people invest into it. Investment in something, the main criteria is return rate and risk, don't need to blar blar about the goodness fo CPO or said it is the best or its goodness. It is all about and dictated by CPO price in the market.
Otherwise, talking goodness and said CPO is the best to lure people into this investment scheme sounds like MLM slaes person already.
No offence, we are not disagree with the goodness of the scheme, instead as said before, yield is attractive enough, just we like to discuss it at the main point, don't want to distract out the issue.

This post has been edited by cherroy: Jan 10 2008, 06:17 PM

anyways its your choice guys, i hav discussed with all of ya the pros and cons of it.
its still consider a safe investment on the long term basis. but its totally not suitable for any short term investment.
on the long run basis, you enjoy the high projected return annually.
otherwise, its better to invest in other short term funds.

but investors out there, its another kind of investment that you can include in your portfolio.
diversify your investment. =)

pm me if there is any need to meet up anyone of u.
thx
Andrew

Aiya Andrew,

This so called gala dinner is not free one!! RM100 /person. Most disappointing that CHGS is not treating its pioneer investors.... Would be interesting to see how many willing to swap the half the dividend for the dinner!

Betul-betul anti-climax!

lol....bros' part of the RM100 per head dinner, will go to charity. Its consider quite ok la for this kind of scale,

9 course dinner
world class acrobatic show from china
entertainment from aflin shauki (he is the malay guy acted in phua chu kuang, entertaining guy)




its gonna be huge, and im pretty sure it will be in the papers, so we all wont be disappointed.

We consultants are paying that RM100 too
The dinner easily costs above RM200 ++, so i guess its still ok by today's standard.

Anyways hope to see u there.

Oh yea, happy cny to all out there, and those who read this post.
May the year of rat brings you good luck and fortune.

This post has been edited by neocappuccino: Feb 9 2008, 11:22 AM

from wat i heard,
Mr Lee is not quite good with the management of his company
and he still quite new with these plantation field

just my two cents

I've just come to know of this CHGS from a Maybank mailer, guess i did not notice any of CHGS earlier marketing efforts.

As i'm very interested to know more before putting in my money, much online research was done. My conclusions are :

1. CHGS is to fund the Management Company(MC) in their project of a 10,000 acre oil palm plantation. For each plot of RM5.5k fee, 29% is set aside to give us the initial returns of 8%x3yrs and 5% kept as Reserve funds with the Trustee. MC gets to use about RM3.5k after marketing costs. If all 28000 plots are sold, MC will have about RM 100 million funds to develop this 10,000 acre project.

2. We lenders are given a nice name as "Growers". For each Grower Fee of RM5.5k we will get a "Grower's Certificate" which is only redeemable after 23 years! Our earning yields from the 4th year onwards will depend largely on Average Annual CPO Price each year which top at 12% regardless when world price goes much higher than RM2.1k where MC keeps all the rest for it's shareholders.

3. Lenders main risk is when CPO price falls below RM1K which is very remote. My lowest expectation is RM1.2k seen 5 years ago against today level of RM3k. MC easily is getting a cheaper source of funds from "Growers" when CPO prices are below RM1.5k as MC only pays 6% or less to "Growers" when compared with loans from banks.
However, when CPO prices go above RM1.5k, "Growers" share in the extra profit is about one-third. The maximum "Growers" can get is 12% on the Fee paid. MC gets to keep all the rest! Hence, MC can also afford to insured the trees too.

4. We can only hope for the "bonus" of extra 1% to 5% since only top performers get harvest output of over 20MTonne/Hectare and today in Kelantan it is below this figure. (Business Times Online)

5. Each acre is expected to produce at least 6MT each year. When CPO price is above RM2.1k, hence MC income will be above RM13k/acre. Note also that only 28000 out of 40000 plots are "sold" to the public. Incomes from the 30% Reserved plots are wholly for MC for their own cashflow and profit purposes.

6. Current value of an operating oil palm plantation in similar location is about RM20K/acre (Terengganu). Value will depend on location, age of trees, yields, facilities, land size, land title, royalty premium, etc. Maximum value can fetched RM50k/acre while lowest with old trees about RM7k/acre current. Hence, with continuous tree replanting, the land after 23 years will then easily worth more than RM20K/acre.

7. MC has over 10 years experience but at a smaller scale 1,196 acre plantation in Sabah. MC has put in RM5 million as share capital plus another RM15.5 million advances from their Group as at Feb-2007 a year ago.


In my final analysis, this CHGS is a VERY good medium/long-term investment for small folks. It is 100% failproof when looking at the possibility of CPO prices and how MC has computed this project to be win-WIN in operating a large physical oil palm plantation. A small limited win for us lender "Growers" and big potential WIN for MC with this very viable and profitable project.

Well, as the saying goes : the rich gets richer, and the rich use our money to make more money...


To Mr.Andrew, i cannot find any mentioned of the Launch Date or the Maturity Date. Please find out the dates and reply here, thanks.


This post has been edited by mkhor7: Feb 14 2008, 10:48 PM

This is long term investment as it goes for 23 years. What will happen in those long years no one knows. I prefer short to mid term investment and so I pass over this investment.

thanks for the summary. Its much easier to read compared to going through the whole thread. But are you really sure about that 100% fail-proof claim? I kinda agree with cuebiz that no one knows what will happen in 23 years.

Nothing is 100% failproof in investment world, everything carries fair share of risk, just more or less only. Even FD in banks is not 100% fail safe.

There is no clause on liquidation part in 23 years period, so if you really need to sell and need the money in this 23 years, one needs to sort it out yourself to find the buyer yourself and transfer the scheme to the buyers. That's the main problem of the scheme.
Don't get me wrong, I am not saying this scheme is no good, indeed it is quite a good long term investment target to participate in plam oil plantation some sort like plantation trust, just liquidation part is somehow can be problematic.
Moreover, the landbanks location is on Gua Musang, Kelantan. If it is west coast area then it is much better as the chance of land price appreciatian has much more potential than east coast.

If one really has more liquid situation but still want to participate in plantation then plantation stocks can be an alternative as well. Don't mean to compare between stocks and this trust scheme as both got pros and cons.

This post has been edited by cherroy: Feb 15 2008, 10:23 AM

mkhor7,

The calculation does not seem correct.

1 plot = RM5.5K

28000 plot = 153 millions.

<<MC will have about RM 100 million funds to develop this 10,000 acre project.>>

That means $10K per acres to develop the land. How much does the original land costs?? We have not even factored in the land costs.

For each acres, the investor pays $22K. In order for this to work, the original land has to cost much less that 15K per acre.

If I am the businessman, the cost of the land will come from the RM3.5K since I do not want to use my own money. So, 3.5K X 28000 = 98 millions. So, it has to be much less than 9.8K per acres.

Those are the guesses base on your number.

Dreamer

Good analysis. I'm interested and also received brochures from MBB. Still evaluating and gathering info.

Out of the RM5.5k paid as Grower's Fee per plot, 29% are kept by the Trustee to pay us 8% for three years and balance 5% to remain as Reserve which will only be released to the MC upon termination/maturity of CHGS. (I guess the 5% goes to pays all the Trustee's costs and other costs like final valuation.) Deducting some other costs for launching, marketing and commissions, I think MC will receive nett about RM100 million.

MC accounts as at Feb-2007 showed they have already put in around RM20 million including land development costs of over RM15 million. The RM100 million from CHGS will be used to buy more seedlings, planting and fertilizers costs, labours , maintenance, re-planting, etc... Hence a fully operating plantation with productive trees would fetch good value even after 20 years. This Gua Musang land lease would likely remain as plantation land for its whole leasehold term.


"100% Failproof" : I should have added that the project on paper looks very good and very viable. This is because the returns is FULLY based on world CPO prices and not on MC plantation business operation. Hence, there is only a very remote risk of downside. Oil palm products future is unlikely to be shaken unless cheaper substitute can be found. I estimated returns to be very likely between 6% to 13% for the whole of 23 years term of the CHGS.
"Growers" are largely removed from other risks such as on the plantation trees which could come from land disaster, disease, flood, drought or other acts of nature/God. MC has stated that some of these perils are insured for, and only 28000 out of 40000 plots are "sold" to "Growers" to enable MC to earn sufficient profits to pay the "Growers" annual interests which is FULLY based on CPO prices.

Good medium/long term investment : This CHGS is definitely not liquid like unit trust or shares, but is almost similar to buying a piece of landed property. When we want to sell, we have to depend on whether there are ready buyers. If only a few are selling at any moment, my guess is that MC can help us to get a buyer. Hence for small folks who want to "own" some plantation property and getting steady annual returns, this CHGS is highly recommended. But for those punters who want returns of over 12%, this CHGS will likely disappoint them.

Why 23 years? I guess MC by then has enough accumulated profits and cashflow resources to continue on their own and to compulsory buyback from "Growers". I hope the valuer appointed at that time will not "discount" too much from the open market value but to give the "Growers" some capital appreciation.


To Mr. Andrew :
Can you confirm whether we will get FULL 8% returns during the 3 years we join this CHGS regardless of the date of joining. eg. if we pay next month March-2008, we will still get in FULL the 8% for ALL of the 3 years after then on Feb-2009, Feb-2010 and Feb-2011.

thanks + regards
michael

This post has been edited by mkhor7: Feb 15 2008, 06:45 PM

You mean it is leasehold land?? It is NOT freehold??


Dreamer

One question,
If the palm oil tree fails to grow enough then there would be no profit, then how the company going to pay the return to the scheme holders?
Yes, it depends on the CPO price but it also depends on the plantation yielding aka fruits grows. In term of any natural disaster like flooding etc, then no profit then how company going to pay the return? Insurance enough to cover? Don't think insurance company want to make losing business as well.

Participant in trust is like owning it and whether to get the return or not, it depends on the profitability of it, just like Reit.

Owning the trust is not exactly like owning a land, just similarity, as same as reit also. Owning a land, you got the land title, you can opt to sell or do whatever you want whenever you wish. But in this trsut scheme, investors basically are tight for 23 years period, unless another person willing to take up the trust or buying from you. Actual landbank or owning a land is much easier to sell than owning a trust espeically the trust is not listed. If listed, then it would be a good plantation trust, as it resolve the main issue, liquidation part.

It is just a leasehold for 23 years?

Don't get me wrong. Not mean to discredit this scheme, instead personally view it is an ok investment target. Just want to highlight some disadvantage besides its pros so that discussion in it will only make a claerer picture and only benefit to all.

Also, 'guess' term is not good enough, it involves hard earned money in stake, every fact in it must be known properly, can't second guessing of it. This scheme already running one, we should able to find out the actual fact of it.

cheers.

This post has been edited by cherroy: Feb 15 2008, 09:48 PM

First of all, I am happy to have finish reading this whole thread.
Frankly, this is a fairly attractive investment because I am not worried of the liquidity of it. 23 years is just fine with me, if I can get steady returns. I have even browsed through the website.

The only matter that bothers me is that the formula for calculating the dividend is not stated anywhere.
I understand from reading this thread that if the CPO is above RM2,100 for the year, then the dividend would be 12%. This is based on output of 21MT right? As we know, oil palm is an agriculture business, so the output is greatly affected by weather conditions.

My concern is, what if the weather condition is bad for the year, and the output goes below 21MT, or what if the price goes below RM2,100 for some reasons? How is the company going to compensate us? Since the scheme is launched in April 2007, if I decide to join now, would I only receive the guaranteed ROI of 8% for 2 years?

I hope Mr. Andrew would kindly discuss this matter with your management and come up with the answers as soon as possible. If this matter is eliminated, I am more than happy to purchase 1 acre as a trial for the moment.

cherroy,

I just realized why 23 years. In Palm Oil, you plant a 3 to 4 years old tree. You need to wait 3 years to harvest. After 23 years, it is 25 - 30 years old tree. You need to replant the tree. So, after 23 years, there is a HUGE cost to replant tree and you may or may not want to do that. You may just want to sell the land.

Dreamer

Yes, palm tree generally has about 20-25 years productive life. As the Gua Musang land lease is good for two cycles to year 2070 with option to extend another 33 years, i would hope that the Management Company (MC) is prudent and smart to do some continuous replanting on the least productive plots on this 10000 acre plantation. With CHGS maturity set to be another 22 years from now, i hope the land value then will be much above RM22k/acre to give participants some capital appreciation.

i would rather not think that MC will squeeze dry the plantation trees for just 1 cycle and move on to start up another plantation elsewhere. Nothing of this is mentioned in the Prospectus and Agreement. Operational things like this would be much dependent on how the land perform or other factors like politic, incentives elsewhere, etc towards the end of this first cycle. Anyway by then many of the current original management team would be gone in year 2029 plus maybe some of us today. Hence it is no point getting current MC to assure us this matter of how they are going to manage this Gua Musang plantation. There may be some comfort that MC has put in some of their own money (RM5million share capital and advances from holding co. which they could get back from CHGS funds) and the fact that there is a cap of 12% ROI to the "Growers" so that extra windfall CPO price goes to their own shareholders.

Annual ROI is fully based on CPO prices. Plantation output would determined whether extra "bonus" of 1%, 3% or 5% would be added to this. i would discount this extra bonus as to get over 20Mton/hectare is not easily achievable and fluctuate very much depending on weather, tree stress, etc.

In short, i see this CHGS as a fixed term loan to MC with variable interest rates that will most likely be 6% to 13%. This "loan" is secured with the Trustee.


Now where is Mr.Andrew/neocappucino? His replies here could benefit us all....

This post has been edited by mkhor7: Feb 16 2008, 04:08 PM