NPC withdrew its offer to sell its Sabah oil palm plantation land to IOI, as it is unable to accept IOI’s revised offer price for the assets, and both parties will discontinue further negotiations on the terms of the proposed transactions. Recall in early Jul-21, IOI made a non-binding offer to acquire several parcels of planted oil palm plantation land in several districts of Sabah (measuring a total planted area of 4,627.8 ha) for a total sum of RM281.2m (or circa RM61k/ha). The latest development has no impact on IOI, given its large planted area (the abovementioned land deal accounts for <3% of IOI’s existing planted landbank). Maintain earnings forecasts (as we have yet to reflect this in our forecast), TP of RM4.44 (based on 24x CY2022 EPS of 18.5 sen) and BUY rating.

NEWSBREAK

NPC withdrew its offer to sell plantation assets to IOI. NPC Resources Bhd (Not Rated) withdrew its offer to sell its Sabah oil palm plantation land to IOI, as it is unable to accept IOI’s revised offer price for the assets, and both parties will discontinue further negotiations on the terms of the proposed transactions.

To recap. In early Jul-21, IOI made a non-binding offer to acquire several parcels of planted oil palm plantation land in several districts of Sabah (namely Labuk & Sugut, Kinabatangan, and Beluran), measuring a total planted area of 4,627.8 ha, for a total sum of RM281.2m (translating to an implied valuation of circa RM61k/ha).

HLIB’s VIEW

No major impact to IOI… given IOI’s large planted area (the abovementioned land deal accounts for <3% of IOI’s existing planted landbank).

Forecast. Maintain, as we have yet to reflect this in our forecasts.

Maintain BUY with unchanged TP of RM4.44. We maintain our BUY rating on IOI, with an unchanged TP of RM4.44 (based on 24x CY2022 EPS of 18.5 sen). At RM3.80, IOI is trading at FY22-23 P/E of 19.4x and 22.9x, respectively.

Source: Hong Leong Investment Bank Research - 29 Sept 2021