IOI corp 2011

IOI share price vs market performance, copied from annual report 2011

Future prospect, IOI group recently just acquired around 12,000 ha of oil palm land in Sabah and planning to enlarge the plantation area in Indonesia with another 27,000 ha over next two to three years. So we are expecting the oil palm area will record the total plantation area to 196,000 ha. That is 25% increase from the current plantation area.

Currently, plantation and resource based profit contribute around 75% to company profit. We assume there is no more growth of the company in these coming three years. The profit growth will be 25% x 75%, which is 18.75%.

Dividend return based on current share price is 3.5%. So the total return in these 3 years time will be 18.75% + (3.5% x 3years) = 29.25%

This 29.25% is a very conservative estimate and almost 100% sure you can get this return. Do not forget we assume there is no more growth for IOI in 3 this coming years which I think it is not impossible as IOI is still holding RM2.8 billion cash on hand. So we can expect a greater return than this 29.25%.