MORNING CALL:28/8/23

Kenanga feels that investors should accept the offer for Boustead Plantations

Transcript

00:00 We start the week with Baustat Plantations, the subject of a tripartite deal between KLK,

00:06 Baustat and LTAT, where one of the ultimate end goals is taking it private.

00:10 Kananga Research has a recommendation for B-Plant shareholders to accept the offer and

00:14 has a RM1.55 target price, which is a 4% premium from its current levels.

00:20 In case you missed it, on Thursday, KLK announced that it was acquiring a 33% stake in B-Plant

00:26 from Baustat Holdings pursuant to a deal described as a "strategic collaboration agreement"

00:32 with Baustat and LTAT with the long-term objective of enhancing the operational efficiencies

00:37 and crude palm oil yields of B-Plant's estates.

00:40 After selling down their 33% to KLK, Baustat and LTAT will still collectively own 35% of

00:47 B-Plant.

00:48 Going into detail, B-Plant is a pure upstream or palm player with 97,339 hectares in Malaysia,

00:56 where more than half of that is in Sabah.

00:58 Separately, B-Plant reported its first half earnings, which Kananga said disappointed,

01:03 posting a core net loss of $0.3 million due to a confluence of a poorer second quarter

01:07 harvest, which was exacerbated by the already high costs compounded by softer CPO prices.

01:14 Kananga actually welcomes the proposal as it allows B-Plant shareholders to exit at

01:18 a better valuation than the equity market would have been ready to offer.

01:22 Going by Bloomberg, aside from Kananga saying to accept the offer, there is one buy from

01:26 Maybank IB and one sell from BIMB Securities.

01:29 Splitting the difference, the average target price is RM1.10, while after an active Friday,

01:34 the counter closed at RM1.49.

01:36 Thanks for watching.