QUOTE(mkhor7 @ Feb 15 2008, 06:31 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
DearMichael,
"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."
Yes its in the agreement that you will get a full nett 8% returns for the first 3 years of the scheme.
But its based on the date you join.
For example this year, its 2008. So the 1st year 8% is over.
Those you join next month March 2008, will only enjoy 2yrs of fixed nett 8%. And even this year itself, it will be pro-rated according to the month.
For those of you who are reading the agreement, its on the page
20.It reads as,
Part 1
Planting Phase.
During the planting phase, which is the period between the Planting Date and expiring at the third anniversary of the Planting Date, the Nett Yield shall be eight percent (8%) of the Grower's Fee.
Added on February 19, 2008, 11:49 amQUOTE(cute_boboi @ Feb 18 2008, 03:19 PM)
I did a simple excel calculation. Assume 5.5k in FD @3% (very conservative, instead of investing in others with higher returns). Annually compounded.
Yr Int. Cumm.
1 165.00 5,665.00
2 169.95 5,834.95
3 175.05 6,010.00
4 180.30 6,190.30
5 185.71 6,376.01
6 191.28 6,567.29
7 197.02 6,764.31
8 202.93 6,967.24
9 209.02 7,176.25
10 215.29 7,391.54
11 221.75 7,613.29
12 228.40 7,841.68
13 235.25 8,076.94
14 242.31 8,319.24
15 249.58 8,568.82
16 257.06 8,825.89
17 264.78 9,090.66
18 272.72 9,363.38
19 280.90 9,644.28
20 289.33 9,933.61
21 298.01 10,231.62
22 306.95 10,538.57
23 316.16
10,854.73On CHGS, assume average out 8% flat ROI p.a.
= (5500 x 8%) = 440
440 x 23 yrs =
10,120Assume worst case scenario, we lost the initial 5.5k investment / land, which is what most of our concerns are:
1) Cannot sell as no buyer
2) MC not going to redevelop/replant after 23 yrs
3) Lease expired
My opinion: The returns are a little bit lower.
However, if we can sell the land >1k, then it is worth it ? 23 yrs locked in with minimal liquidity compared to FD ? Land appreciation/depreciation ?
Note: CHGS 10% ROI p.a. =
11,500 excluding 5.5k initial investment
my 2 cents.
I would like to correct your calculations.
using the same calculating method of yours.
On Bank FD assume average is 3%
5500 x 3% = 165
165 x 23yrs = RM 3795.00
On CHGS, assume average out 8% flat ROI p.a.
(5500 x 8%) = 440
5500 x 23yrs = RM 10120.00
That would make a diff of
Rm 10120 - Rm 3795 = Rm 6325 diff
On the 23rd yr itself, an independent evaluator will price the land, and the TRUSTEE, Management will look for a buyer to purchase the land, or to replant the whole 10,000 acre of land. Either way, investors will get back their capital and their capital appreciation at the maturity period.
Because the money of the sold land will be equally divided back to the investors.
The active role of Mines Marketing Sdn Bhd, other than to help market this scheme, is to also help create a healthy secondary market which involves trading between the holders of this scheme.
So the liquidity issue is also being minimized.
For those MBB card holders, you enjoy a
12months 0% installment plan or a
2 days 1 night stay at palace of the golden horses. for further assistants, kindly drop a PM or ring me at this no
ANDREW
016-317 0935
Im based at Mines Marketing Sdn Bhd Balakong, 10th floor. But im always out for appointments, so i appreciate it if any of you would drop me a call, or leave a pm and i'll get back to u asap.
Added on February 19, 2008, 12:19 pmQUOTE(mkhor7 @ Feb 14 2008, 09:53 PM)
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.
Maturity date for 23 yrs from
5th March 2007 to
5th March 2030 ( i took this based on my sample certificate in my folder )
the attachment below i found from the prospectus
its based on the date agreed between the three parties, management, trustee and grower.
so that reflect back the date the scheme started and also the date officially mines marketing is allowed to start selling.
Added on February 19, 2008, 6:57 pmQUOTE(Jordy @ Feb 15 2008, 10:45 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.
"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."
There is no formula involved in calculating the dividend for investors.
Basically investors will get 2 kind of dividend back.
One based on CPO price, another is based on the yield of the land.
The CPO is above RM2,100 for the year, the dividend would be 12%
Regardless of the condition of the land. Because investors dividend is based mainly on CPO, and the CPO price is taken from the MPOB (Malaysian Palm Oil Board).
And if the yield of the land for that year is
20-24 metric tonne, then investors will get additional 1%
If its
25-29 metric tonne additional 3%
If
30 metric tonne above 5 %.
So basically u add up the 12% with either 1% / 3% / 5%, so end up highest dividend back is
17%"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?"
Every tree is sufficiently covered by insurance. So there is little to worry about the condition of the trees.
If the output goes below 21MT, the u would still get the dividend from the CPO. If the CPO is RM2,100 for that year, you still get 12%. The company still has to honor the signed contractual agreement. Only the yield of the land would be affected, which is still very unlikely because its still above 21MT, u still get additional 1%. Which makes ur return for that year is 13%.
Yes you would only enjoy 2 yrs of guarantee return.
Added on February 19, 2008, 6:59 pmQUOTE(Jordy @ Feb 15 2008, 10:45 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.
"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."
There is no formula involved in calculating the dividend for investors.
Basically investors will get 2 kind of dividend back.
One based on CPO price, another is based on the yield of the land.
The CPO is above RM2,100 for the year, the dividend would be 12%
Regardless of the condition of the land. Because investors dividend is based mainly on CPO, and the CPO price is taken from the MPOB (Malaysian Palm Oil Board).
And if the yield of the land for that year is
20-24 metric tonne, then investors will get additional 1%
If its
25-29 metric tonne additional 3%
If
30 metric tonne above 5 %.
So basically u add up the 12% with either 1% / 3% / 5%, so end up highest dividend back is
17%"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?"
Every tree is sufficiently covered by insurance. So there is little to worry about the condition of the trees.
If the output goes below 21MT, the u would still get the dividend from the CPO. If the CPO is RM2,100 for that year, you still get 12%. The company still has to honor the signed contractual agreement. Only the yield of the land would be affected, which is still very unlikely because its still above 21MT, u still get additional 1%. Which makes ur return for that year is 13%.
Yes you would only enjoy 2 yrs of guarantee return.
This post has been edited by neocappuccino: Feb 19 2008, 06:59 PM Attached thumbnail(s)
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