KUALA LUMPUR: Maybank Investment Bank Research (Maybank IB) has initiated coverage of Boustead Plantations with a sum-of-parts target price of RM2.16, which is 37% above the Tuesday’s traded price of RM1.58.
The research house said Boustead Plantations was trading at about half its realised net asset value (RNAV) of RM3.08 a share.
It said Boustead Plantations was one of largest listed oil palm planters in Malaysia with 71,000 ha of oil palm planted area spread across Peninsular Malaysia (38%), Sabah (37%) and Sarawak (25%).
The average tree age profile of about 14-years and its estate performance (ex-Sarawak) is on par with national average.
Maybank IB Research said Boustead Plantations had 11,000ha of strategic estates in Selangor, Johor, Penang, Kedah and Perak that were ripe for property development.
“By our estimate, these landshave a market value of MYR2.96b, which exceeds Boustead Plantations’s market capitalisation of about RM2.5bil.
“Investors are getting its plantation estates for free,” it added.
The research house said Boustead Plantations plans to increase its planted area by 20,000ha (+28%) in five years, backed by its estimated low net gearing of 11% post listing.
Even without new acquisitions or estate divestments, we estimate that Boustead Plantations will enjoy 32% core net profit CAGR over 2013-16,” it said.
Maybank Research said Boustead Plantations was trading at an attractive enterprise value per planted ha of RM41,000 even without adjusting for its property development potential.
“We estimate Boustead Plantations’ RNAV at RM3.08 a share but peg our target price at RM2.16 a share by attaching a 50% discount to its land value. Our RM2.16 a share target price implies a 2015 PER target of 23.1 times,” it said.