INVESTMENT HIGHLIGHTS

• Visited Johor Premium Outlets (JPO)

• Positive on JPO prospect

• Genting Simon profit contribution at 6.6% to GENP

• Earnings estimate maintained

• Maintain BUY with TP of RM11.00

Visited Johor Premium Outlets (JPO). We visited Johor Premium Outlets (JPO) which is a 50:50 joint venture (JV) between Genting Plantations (GENP) and Simon Property Group (SPG). The Company which owns JPO is called Genting Simon Sdn Bhd. Recall that JPO is Malaysia’s first premium outlet and it opened its doors to the public on 11-December-2011. Following the success of Phase 1, JPO Phase 2 expansion was completed on 15-November-2013. It has more than 130 designers and brand name stores offering savings of up to 65% every day.

Positive on JPO prospect. In view of its high occupancy rate exceeding 90%, Genting Simon has decided to expand JPO. We gather that JPO Phase 3 will add another 40,000 to 50,000 sqft of NLA and the target completion date is by end of 2018. Overall, JPO sits on 45 acres of land and currently it has NLA of 269,000 sq. ft.

Genting Simon profit contribution at 6.6% to GENP. In FY17, Genting Simon contributed Profit Before Tax of RM30.3m (or 6.6% of GENP PBT). This is a significant improvement of 44% yoy. Note that Genting Simon PBT includes the profit from both JPO and Genting Highlands Premium Outlets.

Earnings estimate maintained. We maintain our FY18 CNI forecast of RM302m as the information that we gather has been factored in previously. We also maintain our FY19 CNI forecast of RM347m. Key assumptions are average CPO price of RM2400/RM2430 for FY18/FY19.

Maintain BUY with TP of RM11.00. Our TP is based on Sum Of Parts (Refer Page 2). We like the Company as we expect its FFB growth of 13% yoy to be the strongest among planters under our coverage. This is due to new contribution from recently acquired estate of 12,893 ha and 5000 ha coming to maturity in Indonesia. In 1HFY18, GENP FFB volume has grown by 12%yoy to 965,035 tonnes.

Source: MIDF Research - 23 Jul 2018