Genting Plantations (GENP) has proposed to dispose 25% stake or 72m
shares in its wholly-owned subsidiary, Genting Integrated Biorefinery SB
(GIB) to Elevance Renewable Sciences Singapore for RM72m. In addition,
both parties also entered into a Master Agreement for collaboration to
produce high value palm oil derivatives, which involves a licence and
catalyst supply accord and a project design and consultancy for a total
consideration of USD28m (RM89.5m). It is also the second corporate
exercise for GENP following the disposal of 20 acres in Batu Pahat for
RM34.8m. Pending the completion of both deals, we maintain our Outperform call with an unchanged TP of RM12.96.
Salient details of the proposed disposal. Under the collaboration, GIB‟s 200,000 mt biodiesel plant located in the Palm Oil Industrial cluster, Lahad Datu, Sabah will be transformed into the Metathesis Plant to produce high value palm oil derivatives such as olefins, specialty chemicals and methyl esters. Elevance, a US-based company that was founded in 2007 under a grant from US Department of Energy, has an experienced team that had successfully exploited its metathesis and formulation technology with process knowledge and deep customer relationships to commercialise renewable products. The plant is expected to commence operations and production of high-value palm oil derivatives by 2017. Till today, GENP has invested a total of RM248m in GIB.
Help cushion its upstream earnings during downtrend period. Its debut into downstream activities will help the group diversify its earnings base and reduce high dependency on upstream plantation business, which is highly co-related to fluctuations in CPO prices.
A sweet deal from property unit. Last week, the group also disposed a 20-acre freehold land in Batu Pahat to AEON Co at a selling price of RM34.8m or RM40 psf. The land is part of the bigger 3,062.7 ha land held under GENP. The land, which will be turned into a shopping mall, is expected to help improve the market value and property sales in its existing Genting Pura Kencana project. This was evident when GENP carved out a small parcel of land to AEON and Johor Premium Outlets in Kulaijaya for the development of shopping malls, which subsequently help increase its property contribution. In addition, it also helps fetch higher valuations of nearby landbank, which will bode well for the group in the future.
Source: PublicInvest Research - 14 Jul 2014
Salient details of the proposed disposal. Under the collaboration, GIB‟s 200,000 mt biodiesel plant located in the Palm Oil Industrial cluster, Lahad Datu, Sabah will be transformed into the Metathesis Plant to produce high value palm oil derivatives such as olefins, specialty chemicals and methyl esters. Elevance, a US-based company that was founded in 2007 under a grant from US Department of Energy, has an experienced team that had successfully exploited its metathesis and formulation technology with process knowledge and deep customer relationships to commercialise renewable products. The plant is expected to commence operations and production of high-value palm oil derivatives by 2017. Till today, GENP has invested a total of RM248m in GIB.
Help cushion its upstream earnings during downtrend period. Its debut into downstream activities will help the group diversify its earnings base and reduce high dependency on upstream plantation business, which is highly co-related to fluctuations in CPO prices.
A sweet deal from property unit. Last week, the group also disposed a 20-acre freehold land in Batu Pahat to AEON Co at a selling price of RM34.8m or RM40 psf. The land is part of the bigger 3,062.7 ha land held under GENP. The land, which will be turned into a shopping mall, is expected to help improve the market value and property sales in its existing Genting Pura Kencana project. This was evident when GENP carved out a small parcel of land to AEON and Johor Premium Outlets in Kulaijaya for the development of shopping malls, which subsequently help increase its property contribution. In addition, it also helps fetch higher valuations of nearby landbank, which will bode well for the group in the future.
Source: PublicInvest Research - 14 Jul 2014
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