MINHO TO SEE BIG UPSWING WITH HIGHER GLOBAL TIMBER PRICES

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This covid-19 pandemic had unleashed a massive amount of money into the global financial system, resulting in creeping up inflation. We can see that stock market are heading higher with higher PE ratio, crypto currency are gaining track in the market as the digital gold, and commodities are going higher as well.

The latest QE is the known USD1.9 trillion which President Biden had signed into effect. How is the market going to reflect on this money?

Today I am going to talk about Commodities.

CPO chart are showing massive uptrend on the palm oil. The trend is not stopping and will be looking to hit RM 5000 in the next 3 months to come. Some analyst are projecting RM 6000 to RM 7000.

Here are some metal prices. 

ALUMINIUM GLOBAL PRICES

COPPER GLOBAL PRICES

PLATINUM GLOBAL PRICES

Now, I want to talk about TIMBER prices

TIMBER GLOBAL PRICES

Global timber price will look set to trade around USD 1000 per bdsf. This could be a new norm going forward due to the excessive money printing exercise.

As you can see, when commodities prices go up, a lot of raw material prices will go up, and in the end it will end up in inflation because good and product will go up eventually.

In Malaysia, the steel sector already go up. Leading steel maker - Annjoo, despite report a operating losses, share price went up more than 300%

WHAT IS THE NEXT COMMODITY SECTOR TO SEE UPLEG ?

I believe the next one will be TIMBER SECTOR. Timber companies involved in upstream logging and downstream manufacturing will see massive upleg.

One of the laggard is Minho (M) Bhd - MINHO 5576

The company is involved in timber upstream logging, and downstream manufacturing from plywood to sawn timber. Export market 80% and local usage 20%.

Current share price NTA RM 1.10 per share. MINHO chart shown a breakout from short term down trend. With more than 6 months in consolidation and global timber prices breaking upwards, MINHO is just another company waiting to see a big upwards swing in it's share price.

IMPORTANT NOTICE

Please be informed, I am not a professional or certified analyst. I am not a licensed consultant, just a normal retail investor. I am just sharing on my ideas and  opinion of the market outlook. Above materials are taken from original source as a referencing material. This is not a buy/sell/trade call. Please do your own research and buy at your own risk.

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Global lumber prices soaring to benefit Minho in export

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What is the possible next trend for the global market? 2020 had saw glove theme, vaccine theme, plantation theme, logistic theme and the end year steel theme play. Coming into 2021, we should be looking no further at timber theme play, at least in the 1Q 2021.

Global plywood prices had been staying up, putting up pressure for prices to increase in construction as plywood are one of the main component in construction.

Prices for 1000 bdsf of plywood are now trading above usd 600, and in my opinion, prices will continue to remain inflated above usd 500 due to several factor as highlighted below :-

1. Coronavirus pandemic had affected the supply of log wood due to the lockdown. The timber processing supply chain from upstream logging work until downstream processing are affected by worker supply issue.

2. Developed country practicing work from home are encouraging more home renovation work to be done, and also more new home sales, hence pushing up demand for plywood in construction.

3. The forest supply for raw timber log at British Columbia are affected by infestation of mountain pine beetles. Warmer weather continue to encourage their growth and infestation.

4. Forest fire burned down 15 billion board feet of timber. 

Source - After the fires, timber industry faces ‘generational’ losses and longer-term supply questions of supply (msn.com)

With all the issue that are happening, supply chain are getting damaged while demand keep pushing up higher. This will only result in higher selling prices for timber goods.

WHY MINHO IS A POTENTIAL COMPANY TO GAIN FROM THIS ?

MINHO is in the business of timber for more than 40 years. Throughout the years, the business had expanded into several categories which include

-Kiln drying and chemical preservative treatment
-Manufacturing, exporting and dealing in moulded timber and related products.
-Export of processed timber products
-Trading in logs supply and timber related products
-Exploitation of timber concessions
-Operation of a fully integrated timber complex
-Manufacturing and distribution of industrial paper bags
-Property development
-Plantation

Minho export the sawn timber goods to Germany.

Currently, Minho charting is attractive as consolidation of the chart looks good at 35 cents

The price movement suggest a maturity point where a potential break out point will trigger the share price to move with a positive upward bias based on the global event happening in the timber trading.

For Mid/long term investor, current price around RM 0.35 +/- could be a good entry as price consolidated nicely around this range.

Above information is for reading and references on the write own personal opinion on the global timber trade and how it will affect company (Minho) that is dealing with timber trading. It does not represent a buy sell or trade to your investment decision.

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