• Sustainable earnings growth via plantation. TDM (listed in 1970) has a total of 45,197 hectares of planted oil palm land (about 70% in Malaysia and the rest in Indonesia) for its plantations in Terengganu, Malaysia and Kalimantan Barat, Indonesia. The group also operates four private hospitals with a total of 294 beds in Klang Valley (Kelana Jaya and Taman Desa Medical Centres), Terengganu (Kuala Terengganu Specialist) and Pahang (Kuantan Medical Specialist).

• In 1HFY16, its plantation divisions contributed approximately 70% to PBT while the rest was contributed by its healthcare unit. Consensus is anticipating a healthy 17% profit CAGR from 2016-2018, banking on the stronger CPO prices and steady FFB production growth coupled with the growing demand for private healthcare in Malaysia,

• Poised for resumption of uptrend following a bullish downtrend breakout. At RM0.67, TDM is trading at undemanding 12.8x P/E 17 and 0.69x P/B, about 9.8% and 38% lower than its peers’. We believe TDM’s share prices appear to be at the tail end of its short term consolidation following the recent bullish downtrend line breakout in mid Oct. A decisive close above immediate resistance at RM0.69 (200-d SMA) will spur prices higher to RM0.71 (31 Oct high) and RM0.73 (50% FR) levels before reaching our LT objective at RM0.775 (31 Oct high). Supports are situated at RM0.65 (9 Oct low) and RM0.63 (14 Dec 15 low). Cut loss at RM0.625.

Source: Hong Leong Investment Bank Research - 14 Nov 2016