Golden Palm Growers Berhad VS. Country Heights Growers Scheme

Golden Palm Growers Berhad (GPGB) and Country Heights Growers Scheme (CHGS) are both palm oil management companies. They sell out plots of palm oil (quarter acre called grower’s plot) for the retail investors. CHGS led with this initiative (with its marketing efforts beginning from March 2007) and not only until only recently followed by GPGB (late 2010 till now). Both companies guarantee a return during the planting phase with CHGS paying out 8% for the first 3 years and GPGB paying out 6% for the first 6 years. The subsequent yields during the harvest phase will depend on the concurrent market CPO price. The current average spot settlement price of FCPO on January 2011 is RM3806. The bottom tables and graphs show what yields will be like following its subsequent CPO price.

CHGS payout during harvest phase:

GPGB payout during harvest phase:

At current FCPO price we will draw our attention to the green line on the above chart. Note that GPGB will only be paying out 6% of grower’s fee until 2016, then only realising returns from the indicative green line as above.

2010: Planting begins

2011: Phase 1 completes (30%)

2012: Phase 2 completes

2013: Phase 3 completes

2014: First harvest

2016: Full commercial yield

Let’s assume a hypothetical investment amount of RM100,000 being each invested into Fixed Deposits (we have to assume a ridiculous rule here; that is FD is fixed at 3% for 23 years), CHGS and GPGB. The below table will show at which years CHGS and GPGB will take to earn the same amount an FD will take to earn in 23 years (no inflationary adjustments are made).

Year	FD		CHGS		GPGB
	3%	Payoff		Payoff
0	100000		100000		100000
1	103000	8000	108000	6000	106000
2	106090	8000	116000	6000	112000
3	109272.7	8000	124000	6000	118000
4	112550.9	12000	136000	6000	124000
5	115927.4	12000	148000	6000	130000
6	119405.2	12000	160000	6000	136000
7	122987.4	12000	172000	15000	151000
8	126677	12000	184000	18000	169000
9	130477.3	12000	196000	20000	189000
10	134391.6	12000	208000	21000	210000
11	138423.4	12000	220000	21000	231000
12	142576.1	12000	232000	21000	252000
13	146853.4	12000	244000	21000	273000
14	151259	12000	256000	21000	294000
15	155796.7	12000	268000	21000	315000
16	160470.6	12000	280000	21000	336000
17	165284.8	12000	292000	21000	357000
18	170243.3	12000	304000	20000	377000
19	175350.6	12000	316000	18000	395000
20	180611.1	12000	328000	15000	410000
21	186029.5	12000	340000	N/A
22	191610.3	12000	352000	N/A
23	197358.7	12000	364000	N/A

* Both CHGS and GPGB will take less than 10 years to make what and FD will make in 23 years (assuming CPO is trading at current market price).

*CHGS and GPGB begins Year 1 with its principal added back to its interest because it is assumed that the growers plot can be re-sold at purchase price. GPGB guarantees a buyback of the growers plot after year 2016.

CHGS has a higher payoff than GPGB for the first 10 years of the scheme. However, it is worth noting that both programs kick off at different periods.

Investors would have missed out on CHGS because its offer period closed sometime in 2008. However, investors can still take opportunity of the GPGB as they are still conducting their sales. In my opinion, this is a great chance for investors to diversify their investment pool and be a direct planter (because this is the closest you get to, if you want to sit in the comfort of your own home) and investor to take advantage of Malaysia’s largest commodity export.

Further details can be found on:

http://goldenpalm.com.my/en/index.html

http://www.chgs.com.my/index.asp