Kenanga feels that investors should accept the offer for Boustead Plantations
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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.