MaybankIB Research noted that Genting Plantations owns about 16,900ha of freehold land in Peninsular Malaysia, which is worth more than the company’s market capitalisation.
PETALING JAYA: Genting Plantations Bhd
’s valuable landbank offers good inflationary hedge over the long run, while its immense revalued net asset value (RNAV) will provide downside support, according to Maybank Investment Bank (MaybankIB) Research.
The brokerage noted that in Peninsular Malaysia, Genting Plantations owns 16,908ha of freehold land that is worth more than the company’s market capitalisation.
“Genting Plantations continues to carry these valuable assets at their book values,” MaybankIB Research said, noting 61% of the land was located in Johor, 18% in Melaka and Negri Sembilan, 18% in Kedah and Perak, and 3% in Selangor.
“As the land is amassed progressively since 1981, and strategically located on highly populated areas of the west coast of Peninsular Malaysia, we estimate the freehold land to be worth RM7.25bil, or 1.5 times Genting Plantations’ current market cap,” it added.
MaybankIB Research thus recommended “buy” on Genting Plantations, with a target price of RM6.08 a share based on 19 times earnings.
It said few planters would qualify as property play, and Genting Plantations was one of them.
At an unadjusted enterprise value per planted ha of just RM41,000, it added that Genting Plantations was attractively priced as the market had under-appreciated the value of its 16,908 ha of strategic freehold land and other assets.
It further noted that Genting Plantations currently traded at only 0.9 times price-to-book and 0.33 times its RNAV estimate of RM15.88 per share.
MaybankIB Research pointed out that Genting Plantations had remaining 10,397ha of freehold land in Johor, of which 2,555ha are located in the Iskandar region, making the company one of the largest landowners in Iskandar.
