Upstream oil palm player BPLANT was taken private by Boustead Holdings in 2003, and was subsequently relisted in June 2014, with core business changed from the cultivation of rubber and the management of rubber plantation estate to an upstream oil palm plantation company. The Group manages a portfolio of 45 oil palm estates in Malaysia (19 estates in Peninsular Malaysia, 20 in Sabah and 6 in Sarawak as well as 10 mills in Malaysia). BPLANT’s land bank spans 98,200ha of which 73,500 ha is cultivated with oil palm.

A prime privatisation target? Despite rallying 15% in 2021 (one of the top-performing plantation stocks), BPLANT is still trading at an undemanding 0.57x P/B (-57% and - 19% compared with the industry average of 1.31x and 5-year average of 0.7x, respectively). The steep discount undisputedly makes BPLANT as one of the prime privatization targets by its core major shareholders i.e. Boustead (57.4% stake) and LTAT (12.1% stake), which can be self-funded by disposing some strategic land banks. To recap, BPLANT has ~10k ha of strategic estates located in Selangor, Johor, Penang, Kedah and Perak that are ripe for property development. Ascribing a 5Y average P/B of 0.7x, the offer price of RM0.83 is 21% higher than current share prices.

A revival of asset monetisation. Even if BPLANT is not privatized, a revival of its asset monetization exercises would lead to further re-rating as earnings will be lifted by disposal gains and raises the possibility of higher dividend payouts. Since relisted in 2014, BPLANT has sold more than 2,164 ha of land, raised >RM1.0bn gross proceeds, and distributed about RM1.0bn in total dividends.

Pending resistance breakout. Technically, BPLANT is pending a resistance breakout. A successful breakout above RM 0.69 will spur the prices towards 0.72 -0.75-0.78.Cut lost at RM 0.640.

Source: Hong Leong Investment Bank Research - 5 Jan 2022