Invest in Grower scheme VS invest in plantation shares

A slight diversion from the unit trust investment (but would still be relevant to those who are looking for places to invest their money in).

Have you heard of the Country Heights Grower Scheme?

I got an invitation to invest in this scheme few months back from Maybank.Then when I attended the luxury properties exhibition in KL Convention Center in March 2008, they also had a booth there.

However, the sales person did not manage to convince me to sign up… coz she wasn’t really convincing, and I don’t think she knows much about this other than the sales pitch taught to them.

Interestingly enough, I saw this post by a Mr Hamzah in one of the mailing list I subscribe, and thought it might be of interest to the readers of this blog.

The question posted is as follows:
“Since we are on the topic of Palm Oil land, there is a scheme from Country Heights (Country Heights Grower Scheme) where one can buy a quarter acre plot of land for RM 8,000 now. It was on promotion in March at RM 5,500 per quarter acre.

They promise a yield of 8% every year for the first 3 years, thereafter will be average CPO price of the year + Output from oil palm plantation.
Maturity will be 23 years. On top of that you can sell your plot at any time with land appreciate in consideration.
This land plots are having mature trees that are ready to be harvested. So no waiting period, except for annual management fees of 0.1% on the 4th years onwards.
What is your opinion on this Scheme?

Below is the income stream for the investors (refer to their website) - Country Heights Grower Scheme.

The INCOME STREAMS for the GrowerIncome Distribution during the Harvest Phase - Year 4 to 23(A) = Average annual Crude Palm Oil (CPO) price per metric tonne based on Malaysia Palm Oil Board (MPOB) data.
(B) = Fresh Fruit Bunch (FFB) output of metric tonnes per hectare.
Therefore, annual Nett Yield for year 4 to 23 will be calculated based on: (A) + (B) x invested value = Nett Yield

*Note: If Average Annual CPO price falls below RM800.00, no yield payout. ”

The answer from the Guru was :

“ I have 2 concerns on this:

1. Kelantan is not exactly famous for palm oil cultivation.
2. You always have an option to invest in palm oil stocks such as IOICorp, UtdPlnt, Sime Darby, KLKepong, etc.”

Such a simple answer… but logical and straight forward.

So I decided to do a test using my HLE trading account calculator and the results is as follows:
Instead of investing your RM5500 (price per quarter acre in March promotion) in the scheme..you invested in plantation stock..
how much would you have gained if you had sold off the shares in 2 months?

I did a test using my HLE trading account calculator and the results are as follows:For example…

KLK
If you purchase 300units on 24th March at RM15 *300units + RM37.85 brokerage= RM4537.85
And sold in on 20th May at RM18 * 300units + RM45.42 brokerage = RM5354.58.
So your profit would have been about RM 800 (18% returns within 2 months)

Of coz…if you had invested in Sime, the returns within 2 months would have been very little as the share had been trading sideways lately.

But I did a test of other shares mentioned above and here are the results:

With RM5,500 & investment of 2 months (purchase mid March - during the property fair period, sold mid May)

IOICorp
If you purchase 800 units on 24th March at RM6.75 *800units + RM45.42 (brokerage fee) = RM5445.42
And sold in on 20th May at RM7.50 * 800units +RM49.80 = RM5950.20
Your profit would have been RM504 (9.27% returns in 2 months)

UTD Plant
If you purchase 400 units on 24th March at RM12.80 *400units + RM43.38 brokerage fee = RM5,163.38
And sold in on 20th May at RM14.20*400units + RM47.47 = RM5632.53
Your profit would have been RM469 (9.09% returns in 2 months)

So, there you go..proof right in font of your eyes… you can make money yourself.. no need to rely on other people to do it for you.

Sometimes I think we are always trying to look for all these alternative investments and guaranteed returns and get rich quick schemes… ( and then you hear stories of lost money or companies closing down,etc) , perhaps its just best to go back to basics.
*Of course investment in shares involves luck & risk ;)

Just sign up for online trading account, e.g. at HLE (brokerage fee 0.042%, min RM12) or Jupiter Securities (brokerage fee at 0.05%, min RM8) or other online trading sites.

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