KLK-CH 50% unrealised profit

Kuala Lumpur Kepong Berhad (KLK) is engaged in the business of producing and processing palm products and natural rubber on its plantations. The Company’s subsidiaries are engaged in the business of plantation, manufacturing, retailing, property development and investment holding. The Company has a plantation land bank of more than 210,000 hectares in Malaysia (Peninsular and Sabah) and Indonesia (Belitung, Sumatra and Kalimantan). It operates in six business segments: plantation, manufacturing, retailing, property development, investment holding and others. In April 2009, the Company, via one of its subsidiary, acquired a 17% equity interest in PT Sekarbumi Alamlestari (PT SA) from Forever Green Venture Ltd., which increased its interest in PT SA to 65%. During the fiscal year ended September 30, 2008, the Company acquired Ladang Perbadanan-Fima Berhad, and disposed of a 60% stake in Barry Callebaut Malaysia Sdn Bhd, formerly KL-Kepong Cocoa Products Sdn Bhd.

To be frank, I am not really very interested in plantation stock. After looking through Sime, IOICorp and KLK stock performances, I have to admit that these plantation companies' share price are stable and consistently climbing up. There are hardly any big corrections for their share prices. I guess I will start to study plantation sector too.

On 8 September 2009, I bought KLK call warrant (KLK-ch) at RM0.205. I can remember it was trading at 2-3% discount with gearing of 3-4. I really like warrants/call warrants with discount.

Basically my strategy is very simple, i just try to look for those low premium (if not discount) warrant/call warrant with its mother trading near its resistance. At the same time, the fundamental of the company must be Ok. The fundamental of the companies do not have to be very good.

Now KLK-ch is trading at RM0.295. This trade provides me with unrealized profit of almost 50% in 6 weeks of holding period.

Ok, good luck.

GOon