Monday, August 21, 2017

FW: AmBank Research - Genting Plantations : Acquires 12,893ha of planted land for US$94.97mil HOLD, 21 Aug 2017



Genting Plantations : Acquires 12,893ha of planted land for US$94.97mil                                                                HOLD


We are upgrading Genting Plantations (GenP) from SELL to HOLD as its share price has fallen below our fair value of RM10.84/share. Our fair value for GenP implies a fully diluted FY18F PE of 25x. GenP has proposed to acquire Knowledge One Investment Pte Ltd (KOI) from Lee Rubber for US$94.97mil. KOI has an 85% shareholding in a subsidiary, which has the HGU (Hak Guna Usaha) land title for 14,661ha of oil palm land in South Kalimantan. Out of the 14,661ha, about 12,893ha are already planted. The landbank also comes with an palm oil mill of 60 tonnes per hour.


The oil palm estate in South Kalimantan is young as about 90% of the trees are just slightly older than four years old. Also, the acquisition will increase GenP's planted landbank in Indonesia from 71,940ha (as at end-FY16) to 84,833ha. GenP does not have to worry over land title issues as the oil palm estate in South Kalimantan already has HGU. It is difficult to acquire landbank with the HGU land title in Indonesia nowadays. However, we believe that the acquisition price of about US$15,196/ha (RM65,341/ha) for 85% shareholding of the landbank, is on the high side as it is slightly above the estimated market value of planted landbank in Indonesia of about US$10,000/ha. Our calculation excludes  the value of the palm oil mill of 60 tonnes per hour.


Others :

Axiata Group : New higher priced Celcom postpaid plans                                                                                              BUY

Tune Protect : Take-up rate for travel insurance recovering                                                                                         BUY

Malaysian Pacific Ind. : Growth takes one-year break                                                                                                      HOLD

Automobile Sector : No major surprises                                                                                                                                NEUTRAL




Plantation Sector : News flow for week 14 – 18 August                                                                                                   NEUTRAL




CAB Cakaran Corp., Formosa Prosonic,Yoong Onn Corp., Hengyuan Refining




Malaysia : Another quarter of strong performance




Chin Well : Steel material shortage to fuel Chin Well’s growth

Property Sector  : PKNS ups affordable-home target by 42%

TMCLife: TMC Life Sciences mulls funding options for Johor medical hub venture

Healthcare Sector : Urgent need to regulate healthcare fees




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