KUALA LUMPUR: Analysts believe Boustead Plantations Bhd could go for up to RM3 billion given its strategic landbank size of 97,400 hectare(ha) in Malaysia, following a report in the Edge Weekly that Boustead Holdings Berhad's plans to sell its 57 per cent interest in the company via an open tender.
The valuation could mean a RM1.7 billion price tag for Boustead Holdings' interest.
According to the report, bid submissions were made last week and names such as YTL Group, Wilmar International, IOI Corp Bhd and Kuala Lumpur Kepong Bhd (KLK) participated.
Boustead Plantation's shares hit a near one-year high of 99 sen before settling 10 per cent higher at 98 sen, as at 12.30pm. Some 33.8 million shares were traded.
Based on Public Investment Bank's (PublicInvest) estimates, Boustead Plantations could have an enterprise value of between RM2.5 billion and RM3 billion, given its vast landbank size in Malaysia with some located in strategic areas that are suitable for property development.
"Despite the unattractive track record of having a low fresh fruit bunch (FFB) yield, the plantation group has some attractive landbank spanning across Peninsular region that can be unlocked for property development. We have identified several places, namely Balau (Selangor), Kuala Muda, Kedah Oil Palms and Ladang Bukit Mertajam (Kedah). In addition, such vast plantation landbank size in Malaysia makes it an attractive appetite for the big-cap plantation companies," PublicInvest said.
Maybank Investment Bank (Maybank IB) however believes that Boustead Plantation's upside potential is likely to be capped by its net tangible asset per share (NTA/sh) or RM1.30, valuing it closer to RM2.9 billion.
"We advise minority shareholders to hold out for a potential general offer. We opine Boustead Plantation's upside potential is likely capped by its NTA/sh or MYR1.30. But failure to seal a deal may cause Boustead Plantation's share price to give back recent gains," Maybank IB said.
Maybank IB believes the deal, if materialised, may still be subject to regulatory/ government approvals as Boustead Plantation is a government–linked company (GLC).
"Recall that in April 2020, an unrelated GLC, MSM Malaysia Holdings Bhd, rescinded its sale and purchase agreement with Fraser & Neave Holdings Bhd after its proposal to dispose 4,454 ha of leasehold agricultural land in Perlis, Kedah (in Oct 2019) did not receive Economic Planning Unit's approval," the research firm elaborated.
"In addition, such vast plantation landbank size in Malaysia makes it an attractive appetite for the big-cap plantation companies," it said in a research note.
Boustead Plantations has a total landbank of 97,400ha, of which 72,300ha or 74 per cent is used for oil palm cultivation.
The oil palm cultivated land comprises 20,600ha of mature oil palm areas in Peninsular Malaysia, 10,300ha in Sarawak and 34,600ha in Sabah.
It owns 10 palm oil mills and runs 42 oil palm estates spanning across Malaysian region.