INVESTMENT HIGHLIGHTS

• Potential sale of minority stake in NBPOL

• Neutral on the news

• Earnings estimate unchanged

• Maintain NEUTRAL with TP of RM5.60

Potential sale of minority stake in NBPOL. Bloomberg reported that Sime Darby Plantation Berhad (SIMEPLT) is exploring a sale of a minority interest in New Britain Palm Oil Ltd (NBPOL), quoting unidentified sources. Recall that in March 2015, SIMEPLT acquired NBPOL for USD1.7b. It was mentioned in the news that SIMEPLT is considering selling 25% to 49% of NBPOL stake. We gather that NBPOL have a total landbank of 139,899 ha, (86,542 ha planted with oil palm; 89% mature). The company also has over 5,600 hectares of sugar cane and 8,956 hectares of grazing pasture. Lastly, NBPOL operates 12 oil mills and two refineries in PNG and Liverpool, United Kingdom respectively, as well as a seed production and plant breeding facility.

Neutral on the news. As the deal is still in the early stage of exploration, we are neutral on the news. Factors that we will consider will include the valuation of the deal, the actual amount of stake to be sold eventually and whether there is synergy in the potential future buyers.

Earnings estimate unchanged. We maintain our core net profit estimate for FY18 at RM1.17b. For FY19, our core net profit forecast is RM1.21b.

Maintain NEUTRAL with TP of RM5.60: Our Target Price is based on the average Target Price derived from Price To Earnings (PE) and Price To Book (PB) methodology. Refer Page 2 for the details of the valuation.

Source: MIDF Research - 29 Jan 2018