Initiate with a BUY with a SOP-TP of MYR2.16; +37% upside.
Boustead Plantations (BPLANT) trades at approximately half its RNAV of MYR3.08/sh; it is deep in value.
~60k ha estates are for free as current share price merely reflects the value of ~11k ha with development potential.
Source: Maybank Research - 6 Aug 2014
Boustead Plantations (BPLANT) trades at approximately half its RNAV of MYR3.08/sh; it is deep in value.
~60k ha estates are for free as current share price merely reflects the value of ~11k ha with development potential.
A pure Malaysian upstream plantation player
BPLANT is one of largest listed oil palm planters in Malaysia with ~71k ha of oil palm planted area spread across Peninsular Malaysia (38%), Sabah (37%) and Sarawak (25%). Operationally, it has an average tree age profile of ~14-years old and its estate performance (ex-Sarawak) is on par with national average.MYR2.96b value for land with development potential
Due to its long history, BPLANT has ~11k ha of strategic estates located in Selangor, Johor, Penang, Kedah and Perak that are ripe for property development. By our estimate, these lands have a market value of MYR2.96b, which exceeds BPLANT’s market cap of ~MYR2.5b. Investors are getting its plantation estates for free.32% CAGR in 2013-16 net profit
BPLANT plans to increase its planted area by 20k ha (+28%) in 5 years, backed by its estimated low net gearing of ~11% post listing. Even without new acquisitions or estate divestments, we estimate that BPLANT will enjoy 32% core net profit CAGR over 2013-16.Initiate with BUY, SOP-TP of MYR2.16
BPLANT currently trades at an attractive EV per planted ha of ~MYR41k even without adjusting for its property development potential. We estimate BPLANT’s RNAV at MYR3.08/sh but peg our TP at MYR2.16/sh by attaching a 50% discount to its land value. Our MYR2.16/sh TP implies a 2015 PER target of 23.1x.Source: Maybank Research - 6 Aug 2014
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