PETALING JAYA: Genting Plantations Bhd
is expected to see an increase in gearing due to its expansion into property development in Jakarta, Indonesia, but analysts remain unconcerned.
Genting Plantations had announced the acquisition of two adjacent land parcels totalling 152ha in Sentul City in Jakarta, Indonesia for RM593mil from PT Sentul City TBK and its related companies.
Despite the anticipated rise in net gearing to 0.32 times from 0.22 times, analysts from Kenanga Research and Hong Leong Investment Bank Research (HLIB Research) maintained a “positive” outlook.
Kenanga Research highlighted that the proposed acquisitions in Jakarta would elevate the plantation group’s gearing but emphasised that the levels will remain “quite contained and manageable”.
At an average price of RM1.58mil per acre, the research outfit said Genting Plantations is paying a fair price.
“A quick check on Indonesia-based property portals revealed that asking prices for larger land tracts (eight to 18 acres) in Sentul, Bogor, range from RM1.18mil to RM2.92mil per acre,” it noted.
While HLIB Research acknowledged that this acquisition would see an increase in the gearing ratio, it said earnings impact will likely be muted in the near term as it would take a while before the venture starts contributing to Genting Plantations’ bottom line.
Pending more updates from management, the research house retains its target price of RM5.80 per share, maintaining a “hold” rating.
Kenanga Research, meanwhile, has trimmed its financial year 2025 earnings forecast by 3% to account for higher finance costs, while property sales from Sentul City are unlikely to come in within the forecast period.
The research outfit has maintained a “market perform” call with an unchanged target price of RM6 per share.
Genting Plantations is laying the groundwork for another possible premium outlet in Greater Jakarta, according to Kenanga Research.
It also expects potential property demand uplift following such an opening.
