PETALING JAYA: TSH Resources Bhd
is steadily building up its oil palm assets in Indonesia via its latest proposed related-party acquisition of landbank in Central Kalimantan for RM36.3mil, say analysts.
The acquisition is of PT DAS with 787 ha of plantable area and Konsep Majureka Sdn Bhd, which holds a 90% stake in PT KMS with a larger 9,842 ha, of which both assets are near TSH’s existing estates in Indonesia.
This enables operational integration and improved estate clustering for the group.
According to Kenanga Research, the valuations for the proposed landbank are slightly higher than recent transactions, but “the overall land cost is still low”. With RM103mil net cash, TSH can easily fund the proposed acquisition internally, the research house said in a report yesterday.
“All in, RM6,440 per ha for plantable land, before planting up cost, is not expensive given the scarcity of oil palm land and a positive outlook for palm over the longer term, in our view.
“The estimated return on investment, when matured, should still be more than 10%,” Kenanga Research pointed out.
Note that the asking prices for matured oil palm land in Malaysia can hit RM100,000 per ha or more and RM40,000 per ha (or higher) in Indonesia.
Kenanga Research maintained an “outperform” call on TSH with a target price of RM1.55 per share. It also made no changes to its forecast, keeping the crude palm oil prices at RM4,250 per tonne for 2026 and RM4,200 for 2027.
The risks to its call include weather impact on edible oil supply, unfavourable commodity prices fluctuations and cost inflation. In a note to clients, MBSB Research said the near-term earnings impact on TSH from the proposed landbank acquisitions is expected to be limited.
This is given that the immediate plantable area of 4,299 ha is still at an early development stage with no meaningful earnings contribution, as both companies were loss-making. However, the acquisitions should enhance medium-term earnings visibility through expanded plantable areas to about 42,000 ha, up by 11% versus 37,599 ha in 2024 and improved cost absorption, it noted.
As estates mature and infrastructure develops, the operational leverage is expected to improve.
Importantly, funding is internally sourced, which has no material impact on gearing as TSH is a net-cash company, the brokerage pointed out.
Following the recent share price run-up, MBSB Research has downgraded TSH to a “neutral” call from a previous “buy,” with an unchanged target price of RM1.36, as much of the near-term positives appear to be priced in.
While fundamentals remain intact, the brokerage said the upside is now more limited, leaving a more balanced risk-reward at current levels.
Meanwhile, an analyst with a local brokerage believes the latest proposed acquisitions will support more efficient field management, optimise resource deployment and enhance logistics coordination for TSH in Indonesia. This also provides a clearer pathway for scalable development across TSH’s Kalimantan operations over the medium term.
