INVESTMENT HIGHLIGHTS

• Acquiring office space in Jakarta for RM29.3m

• Neutral on the news

• Earnings estimate maintained

• Maintain BUY with TP of RM12.06

Acquiring office space in Jakarta for RM29.3m: Genting Plantations Berhad (GENP) has announced that it is acquiring a 1,923 m2 of office space at DBS Bank Tower 15th Floor, Ciputra World 1 Jakarta Indonesia for IDR93.8b (or RM29.3m). This is a related party transaction (RPT) as GENP is buying from PT Lestari Properti Nusantara (PT LPI) which is an indirectly 95% owned subsidiary of Genting Berhad. Target completion date is in 4Q2017.

Neutral on the news. Although it is an RPT, the transaction price of IDR93.8b is close to the independent valuer price of IDR93.82b. We gather that GENP will be enjoy some savings as the current rental yield of 8.6% exceeds the return from GENP internally generated funds and borrowing cost.

Earnings estimate maintained. No impact on FY17 earnings as it should complete in 4QFY17. For FY18, net positive impact to earnings is expected to be about RM1.0m which is less than 1% of FY18 earnings estimate of RM367m. Hence, we maintain our FY18 earnings estimate. Net gearing is unaffected at 0.30x due to the small amount involved.

Maintain BUY with TP of RM12.06. We continue to like GENP due to: i) high FFB growth expected at 13% this year, ii) its young age profile and iii) strong 1HFY17 earnings surge of 157%yoy to RM150.9m.

Source: MIDF Research - 20 Oct 2017