Following its earlier decision of not proceeding with the proposal to
acquire Kulim's 49% stake in New Britain Palm Oil Limited (NBPOL), Sime
Darby (Sime) has made a quick comeback with a General Olfer to buy out
all NBPOL's shareholders at £7.15 (RM37.54) per share, which is a
massive premium of 85% to the last closing price on Wednesday on the
London Stock Exchange. The offer, which represents a 2%-10% premium to
NBPOL's independent fair value, values the entire company at
approximately £1.073bn (RM5.63bn). Pending the outcome of the General
Offer, we maintain our Neutral call on Sime with an unchanged TP of RM9.99.
Recap. Sime has shown its interest in NBPOL since July following the failure of Kulim in raising its stake in NBPOL. Sime had entered into exclusive discussions with Kulim for a period of 60 days but was surprisingly not extended last week following the expiry of the exclusivity period. The huge General Offer of £1.073bn (RM5.63bn) or £7.15 (RM37.54) per share for NBPOL has indeed surprised the market again.
Synergistic deal. With the acquisition of NBPOL, it will pave the way for Sime's maiden foray into PNG without the need for hefty pex and time in building up its presence. Management guided that NBPOL will make up at least 4%-5% of earnings contribution to the Group for the next 2 years based on a 5-year average CPO price of USD800lmt Apart from that, the acquisition will increase Sime's landbank size close to 1m ha from 864,141 ha while NBPOL's two refineries, in Liverpool, UK and in PNG will also help complement Sime's existing downstream activities in EU and Southeast Asia and increase total refining pacity to 4m mt.
Valuations. The offer, which values NBPOL at an Evlha of RM84,200, is higher than other recent plantation acquisitions, which traded in the range of RM70,000-RM78,000. It is also higher than the NBPOL's independent fair value of £6.50 and £7.00 per share released in Aug 2013. We also opine the offer is fairly high especially in the current down cycle of CPD prices. However, it is the price to pay for the i) young age profile, ii) strong FFB yield, iii) potential synergies in downstream and iv) management control Mth the minimum acceptance of 51%, which also helps consolidate its plantation arm. Sime will fund the acquisition through 80% from external borrowings while the remaining 20% will come from its internally generated funds. Its gearing level eventually will increase from 38% to 55% but will be pared down subsequently through i) tight control of capex across divisions, ii) proceeds from potential IPO exercise and iii) cash savings from dividend reinvestment plan. The Group has received the backing from the PNG Government and NBPOL board, who intends to recommend NBPOL's shareholders accept the General Offer.
Source: PublicInvest Research - 10 Oct 2014
Recap. Sime has shown its interest in NBPOL since July following the failure of Kulim in raising its stake in NBPOL. Sime had entered into exclusive discussions with Kulim for a period of 60 days but was surprisingly not extended last week following the expiry of the exclusivity period. The huge General Offer of £1.073bn (RM5.63bn) or £7.15 (RM37.54) per share for NBPOL has indeed surprised the market again.
Synergistic deal. With the acquisition of NBPOL, it will pave the way for Sime's maiden foray into PNG without the need for hefty pex and time in building up its presence. Management guided that NBPOL will make up at least 4%-5% of earnings contribution to the Group for the next 2 years based on a 5-year average CPO price of USD800lmt Apart from that, the acquisition will increase Sime's landbank size close to 1m ha from 864,141 ha while NBPOL's two refineries, in Liverpool, UK and in PNG will also help complement Sime's existing downstream activities in EU and Southeast Asia and increase total refining pacity to 4m mt.
Valuations. The offer, which values NBPOL at an Evlha of RM84,200, is higher than other recent plantation acquisitions, which traded in the range of RM70,000-RM78,000. It is also higher than the NBPOL's independent fair value of £6.50 and £7.00 per share released in Aug 2013. We also opine the offer is fairly high especially in the current down cycle of CPD prices. However, it is the price to pay for the i) young age profile, ii) strong FFB yield, iii) potential synergies in downstream and iv) management control Mth the minimum acceptance of 51%, which also helps consolidate its plantation arm. Sime will fund the acquisition through 80% from external borrowings while the remaining 20% will come from its internally generated funds. Its gearing level eventually will increase from 38% to 55% but will be pared down subsequently through i) tight control of capex across divisions, ii) proceeds from potential IPO exercise and iii) cash savings from dividend reinvestment plan. The Group has received the backing from the PNG Government and NBPOL board, who intends to recommend NBPOL's shareholders accept the General Offer.
Source: PublicInvest Research - 10 Oct 2014
Festive demand may
support CPO prices: Angel
According to Angel Commodities Palm oil may trade on a positive note.
Festive demand and positive overseas markets may support prices.
However, higher imports and comfortable supplies may cap the upside,
says the report.
Angel Commodities
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Angel Commodities' report on Crude Palm Oil (CPO)
CPO Oct Futures corrected from higher levels on profit taking and
tracking weak soy oil and settled 1.05% lower. Prices gained on Monday
tracking higher overseas edible oil markets.
Palm oil Nov futures on KLCE traded on a positive note Monday tracking
overnight gains in soy oil and settled 0.55% higher. Good export demand
also supported prices while higher output during seasonally higher yield
period capped sharp gains.
According to Malaysian Palm oil Board, exports decreased 0.42% in August
against July, while palm oil output increased 21.98% and the end stocks
increased 21.92%.
Exports of Malaysian palm oil products in September increased 16.3% to
1,497,828 tonnes from 1,288,117 tonnes shipped in August. Indonesia has
removed export tax for October from 9% in September. Malaysia has exempt
export tax for September and October.
India's crude palm oil imports increased 69.03% in August to 640,072 tn
from 378,662 tn last year.
Outlook
Palm oil may trade on a positive note. Festive demand and positive
overseas markets may support prices. However, higher imports and
comfortable supplies may cap the upside. Prices may also take cues from
movement in the Rupee.
For all commodities report, click here
Read more at: http://www.moneycontrol.com/news/brokerage-recos-commodities/festive-demand-may-support-cpo-prices-angel_1198211.html?utm_source=ref_article
Read more at: http://www.moneycontrol.com/news/brokerage-recos-commodities/festive-demand-may-support-cpo-prices-angel_1198211.html?utm_source=ref_article
Festive demand may
support CPO prices: Angel
According to Angel Commodities Palm oil may trade on a positive note.
Festive demand and positive overseas markets may support prices.
However, higher imports and comfortable supplies may cap the upside,
says the report.
Angel Commodities
More about the Brokerage...
1
2
0
Google +0
1
Comments (1)
Angel Commodities' report on Crude Palm Oil (CPO)
CPO Oct Futures corrected from higher levels on profit taking and
tracking weak soy oil and settled 1.05% lower. Prices gained on Monday
tracking higher overseas edible oil markets.
Palm oil Nov futures on KLCE traded on a positive note Monday tracking
overnight gains in soy oil and settled 0.55% higher. Good export demand
also supported prices while higher output during seasonally higher yield
period capped sharp gains.
According to Malaysian Palm oil Board, exports decreased 0.42% in August
against July, while palm oil output increased 21.98% and the end stocks
increased 21.92%.
Exports of Malaysian palm oil products in September increased 16.3% to
1,497,828 tonnes from 1,288,117 tonnes shipped in August. Indonesia has
removed export tax for October from 9% in September. Malaysia has exempt
export tax for September and October.
India's crude palm oil imports increased 69.03% in August to 640,072 tn
from 378,662 tn last year.
Outlook
Palm oil may trade on a positive note. Festive demand and positive
overseas markets may support prices. However, higher imports and
comfortable supplies may cap the upside. Prices may also take cues from
movement in the Rupee.
For all commodities report, click here
Read more at: http://www.moneycontrol.com/news/brokerage-recos-commodities/festive-demand-may-support-cpo-prices-angel_1198211.html?utm_source=ref_article
Read more at: http://www.moneycontrol.com/news/brokerage-recos-commodities/festive-demand-may-support-cpo-prices-angel_1198211.html?utm_source=ref_article
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