-  RAM Ratings has assigned a rating of AA2(s) to Genting Plantations (GenP)’ SPV, Benih Restu Bhd, which has proposed to issue a RM1.5bil 15 year-Sukuk Programme (2013/2028).

-  GenP’s own ratings are affirmed at AA2/stable/P1.

-  According to RAM, GenP’s gearing ratio is expected to peak at 0.5x as it continues to expand in Indonesia.

-  Borrowing rate on the proposed RM1.5bil 15 year-Sukuk has not been decided yet.

-  GenP was in a net cash position of RM248mil as at end-FY12. As at end-March 2013, GenP’s net cash declined to RM170.7mil.

-  We think GenP would use the proceeds from the Sukuk issue to continue expanding in the plantation and property businesses.

-  The group recorded a capex of RM108.9mil in 1QFY13. In FY12, capex amounted to RM316.4mil.

-  New plantings in Indonesia are estimated at 7,000ha in FY13F. Planting cost until maturity is approximately RM15,000/ha to RM18,000/ha.

-  As at end-FY12, GenP’s planted area in Malaysia and Indonesia stood at 113,139ha. Total planted area in Indonesia amounted to 60,159ha as at end-March 2013.

-  GenP’s property division recorded sales of RM127.4mil in 1QFY13 versus RM32.8mil in 1QFY12. Out of the RM127.4mil sales, roughly RM85mil came from the sale of industrial land.

-  Maintain BUY on GenP for its strong volume of FFB production, which is underpinned by increases in mature areas in Indonesia.

Source: AmeSecurities