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

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

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

Hi cute boboi

Your calculation for CHGS scheme has error! You have simplified assumption the annual ROI paid yearly cannot earn interests external of the CHGS. The fact is that this average payment of your figure of RM440 will be make EVERY year AND which can also earn interest too in other saving opportunities. This will then compare very favourably against FD of 3% annually of only RM165.

Yes, i agreed with you that there is no "capital protection" here for our initial investment. It will very much depend on how well the appointed Trustee will perform their duties to ensure the land assets are kept fully planted and developed.

michael

---

Added on February 20, 2008, 2:28 amMany thanks Andrew for reply here above.

However, i am very unhappy with the reply that 1st planting year of 8% return has gone and remaining about two planting years where returns are guaranteed 8%. This somewhat contradict what is stated for the answer to CHGS website FAQ No.11 :



CHGS eleaflet page 2 Income Distribution :


Hence, the CHGS Agreement position is that only Growers who signed-up on the Launch Date will get full 8% times 3 planting years. Later joiners will get prorated "1st planting year" returns or even NONE of this 1st year 8% guaranteed return if you join now .

Anyhow, this 1st year 8% is part of the 29% Reserve Fund with the Trustee. According to page 30 of CHGS Prospectus , it shall be released to the Management Company(MC) on the 1st Anniversary from the Planting Date. Hence, if Planting Date means the Launch Date which Andrew said is 5 March 2007, Trustee will pay this 1st year 8% of the Reserve Fund on 5 March 2008 to MC. But depending on how early the individual grower signed-up, MC gets to keep a large portion of it!

Anyway, all Growers can only look forward for better returns from 4th planting year onwards to be higher than 8% guaranteed in the initial 3 Planting years.


michael

This post has been edited by mkhor7: Feb 20 2008, 02:46 AM

Hi all

These are my summary of this CHGS which i hope others may find useful.

Based on the Grower's Management Agreement :

Launch Date = 6March2007 - date my own, to be confirmed by CHGS management

Planting Phase = 3 years (6March2007 to 5March2010 - dates my own)
Nett Yield shall be 8% of the Grower's Fee paid.

Harvest Phase = 20 years (6March2010 to 5March2030 - dates my own)
Nett Yield % of Grower's Fee paid = % based on average annual CPO price per MT + bonus % based on output per hectare.

Annual Management Fee
Harvest Phase only = 0.1% of the Grower's Fee paid

Yearly Income Payout Date = by 14 February

Maturity Date or Expiry of CHGS = 5March2030 - date my own
Refund on Maturity per Grower's Plot = Net proceeds from Plantation disposal / No. of Grower's Plots


Hence, a conclusion here is that Nett Yield for the next two years will still be 8% of Grower's Fee based on the actual amount paid. The only different is it cost later joiners higher per Grower Plot for a share of the net disposal proceed on Maturity Date.


8% is forecasted as the most likely returns for all the subsequent years in the Harvest Phase to simplify evaluating this CHGS viability. Also there is about 22 years left in this CHGS to go before the Maturity Date.

The current CHGS Prospectus expires on 11March2008. Hence current Grower's Fee of RM5500 per plot will hold until then.

cheers,
michael

This post has been edited by mkhor7: Feb 26 2008, 03:36 AM

Hi, CHGS agreement gave returns based on your initial buying price. Hence those who pay RM 6K will get returns based on this amount.

The only different is that upon Maturity of the scheme in year 2030, your returns will be based on number of lots held regardless of the price you have paid.

Hi all

Based on info in the CHGS agreement, the land lease from Yayasan Kelantan Darulnaim (a statutory body under the Kelantan govt.) is for an initial 66 years from Dec-2004 to Dec-2070. (How many of us would still be around then?) The management company has an option to extend it for another 33 years.

Hence this period of 66 years is sufficient for two full generations of palm trees. The lease period is also longer than this CHGS scheme which is just 23 years ending in 2030.

regards
michael

This post has been edited by mkhor7: Apr 9 2008, 01:05 PM

The meeting need quorum of only 10% or 3600 Grower Plot owners which i think is easily possible. However as stated above they need 75% of attendees and proxies to agree to this Proposed Voluntary Termination.

They also said a main problem is shortage of manual labours beside blaming on the minimum wage of RM900.

After taking over RM200million from us after we were convinced to invest for the long term in this scheme, they now turnaround to claim poor current FFB harvest and expert's low future forecast is limiting their ability to continue paying out annual yield of 12% based on CPO prices, thereby eating into the profit of PGCB, the management company, and Bee Garden, their holding company. I agree with another poster here that our yield rate be temporary reduced, maybe to 9% as given by another similar scheme - Golden Palm Growers Scheme.

Whatever, this early termination is definitely bad news that further dent LKY reputation. It is now with big fat Hope they can give us good value for this plantation that is planted with our RM200million investment.

I further hope they will not cheat us of the 12% yield earned for the year 2012 which had high CPO prices.

This post has been edited by mkhor7: Jan 22 2013, 02:23 AM

The management company, PGCB, is profitable every year since 2007. But due to high global CPO prices which easily guarantee us 10-12% dividend yield yearly, they now claimed our CHGS plantation cannot generates the harvest to actually pay us this high returns. Hence they want to stop this scheme by selling of plantation and returning to us whatever balance left from the sales nett proceed. No mention whether we will get our 2012 yield of 12%(2012 average CPO was above 2100) which we have earned that they must pay by 14 Feb in cash of over RM20million. If PGCB has cash problem, it looks likely this will be forfeited when our CHGS is terminated during this pre-CNY meeting on 8-Feb.


The Proposed Voluntary Termination will pay us now 10%, and 90% within two years to get a new buyer which may be uncertain. Are we at their mercy...?

This post has been edited by mkhor7: Jan 22 2013, 12:15 PM

Page 8 Recommendation by Independent Adviser stated that if this proposal is not accepted, then the Trustee will have to call a meeting to determine the best course of action which may take considerable time. He underline "Growers may not be able to realize the full Grower's Fee invested."

It seems cannot attached the scan circular (received yesterday) directly here in LYN. They shd make it available on CHGS website.

This post has been edited by mkhor7: Jan 22 2013, 02:34 PM

download circular here 2.5MB

Edited
Another poster hyh78 has found it now available on CHGS website. Download this smaller size file.
Circular 0.85MB

This post has been edited by mkhor7: Jan 26 2013, 07:21 PM

They use our RM200million cash to develop the plantation by convincing us that their management company PGCB and holding co is strong and stable.
Then their experts discovered many problems with the land / location / government labour policy / high CPO price ....
However now the plantation under CHGS is forecasted not able to produce the return to match the foreseeable constant high CPO prices. But MC has to pay us 10-12% yearly thereby eating into PGCB other plantations profits. This could cost them a lot which is why they choose to dent their reputation by ending this scheme soonest possible. The cash reserve fund set aside to pay the initial few years of yield is depleted.

Please read all the covenants that PGCB said they would uphold in their sales prospectus available on CHGS website, now it is worthless sh......

Part A Page 5 No.5 stated that their holding co, Bee Garden Hldg s/b, has already issued LU dated 17-January-2013. It seems very clear they are avoiding to pay us 2012 yield of 12% by terminating early before 15-Feb-2013 due date for the yearly yield payment. They have to find the cash....

This post has been edited by mkhor7: Jan 22 2013, 04:28 PM

Their promise of "certainty", covenants in agreement, etc are just like politician talks... it is money talk louder, if no money to be made - wait for the money, if they have to lose money - its bye-bye to your money, not theirs ....

@hyh78 thanks!
@stonkong It was scanned and uploaded before CHGS has make it available on their website.

Hi FalseAlias

All buyers are very angry and disappointed with this Proposal by PGCB. Until the meeting day, many of us are still confused and grieving over our imminent losses.
But please, fellow forum members here do not need harsh words.

CHGS by their action is throwing the contract covenants into the bin because they claim no foreseeable profitability from the CHGS plantation, and they do not want to "subsidy" from their other plantation and business. Money talks louder than their dignity.

Our best strategy now could be vote Against their Proposal, then use the meeting to find alternative solutions. Be prepared for more meetings after CNY with the Trustee and PGCB.
One sure thing by voting Against is that CHGS must pay us 2012 yield of 12% due on Valentine Day Feb-14.

I'm in Ipoh... and CHGS choose a very bad time of heavy traffic to hold the meeting.

We have to find someone to be our proxy at the meeting.

Update
MSWG is supportive and has given permission for Signed Proxy Forms to be quickly send to their office address which is listed here in postings on Jan 30.
MSWG will organize a group of proxy holders to attend the Feb-8 meeting on your behalf.
MSWG is giving a forum on Monday Feb-4 at their office at 11am.



This post has been edited by mkhor7: Jan 31 2013, 10:15 PM

FalseAlias, are you going to be there to shoot and bang! bang! ? ....words and fists on the table

We don't know how many proxies they can produce to secure their 75% FOR ... it may be like in politics, anything can happen under the table.
Hence, our every vote, by proxy and in person, counts towards AGAINST this proposal.

This post has been edited by mkhor7: Jan 23 2013, 05:46 PM

The Proxy Form can appoint someone who if do not turn up, the Chairman of the meeting must use count your vote according to your instruction. Remember to indicate "X" in only one correct box and also the form signed by a witness.

It has to be send back to the address stated to reach them latest on 10am 6-Feb . The address is the Company Secretary of PGCB, the management company itself.
As security, an original sign copy must be given to your appointed person.

@ stonkong, can we PM you for your address ? We can then mail the Proxy Form this week to you so that you can lodge it at their office before the deadline. Thanks!

Anyone else who can act as our Proxy?