Dear friends

Now after LTAT took Bplant private

We see LTAT sold lands to Kedah Govt for Kulim Industrial Park for a Whopping 1,000% Gain!

See

This article first appeared in The Edge Malaysia Weekly on March 18, 2024 - March 24, 2024

BOUSTEAD Plantations Bhd (BPlant), a wholly-owned subsidiary of Lembaga Tabung Angkatan Tentera (LTAT)-controlled Boustead Holdings Bhd, is in talks to sell 1,200 acres of plantation land in Kulim, Kedah, to Kulim Technology Park Corp Sdn Bhd (KTPC), according to sources.

It is understood that the price tag being bandied about is RM7.50 to RM7.80 psf, or about RM400 million for all of the 1,200 acres.

In an email response to questions from The Edge, Boustead Holdings says, regarding the possible sale of land by BPlant: “BPlant continuously reviews its assets, guided by sustainability, innovation and stakeholder value. We keep details of specific transactions confidential until completion to ensure the integrity and strategic focus of our discussions, safeguarding the interests of all parties involved.”

KTPC officials declined to comment when contacted. 

KTPC, the developer and manager of Kulim Hi-Tech Park, is wholly-owned by Perbadanan Kemajuan Negeri Kedah, or the Kedah state economic development corporation. It is understood that KTPC is looking at expanding its 5,000-acre land bank, which is already fully utilised by almost 50 clients and their manufacturing facilities.

Kulim Hi-Tech Park, which started ope­rations in 1996, has been gaining traction, with both local and multinational companies setting up operations at its premises, with some of the better-known companies being Intel Products (M) Sdn Bhd, Infineon Technologies (Kulim) Sdn Bhd, AT&S Austria Technologie & Systemtechnik (Malaysia) Sdn Bhd, OSRAM Opto Semiconductors (Malaysia) Sdn Bhd and SilTerra Malaysia Sdn Bhd.

From 1996 until end-2023, the total investment value of Kulim Hi-Tech Park was about RM147 billion. Sectors that KTPC focuses on include wafer fabrication, semiconductor, electrical and electronic engineering, alternative energy, biotechnology, medical and life sciences, and services and supporting industries.

Meanwhile, a source familiar with activity in Kulim says “talks are on-going” between BPlant and KTPC.

“From what I understand, the 1,200 acres will be acquired in two tranches. The first, about 500 acres, will be acquired very soon, followed by the remaining 700 acres. There shouldn’t be any glitches this time around,” the source adds, referring to the botched plans of Boustead Holdings and its parent LTAT to hive off 33% of BPlant for RM1.15 billion to Kuala Lumpur Kepong Bhd (KLK) last year, followed by a privatisation offer to minority shareholders. The deal fell through after it was labelled as one that involved bumiputera assets being sold to a non-bumiputera entity, even though LTAT would still retain a 35% stake in BPlant. At RM1.55 per share, BPlant was valued at RM3.47 billion for its entire 42 estates, about 97,400ha (241,000 acres) and 10 oil palm mills.

According to its FY2023 annual report, BPlant has two plantation estates in the Kulim region: the 600-acre Kedah Oil Palms Estate; and the roughly 6,440-acre Bukit Mertajam Estate. According to BPlant’s FY2022 annual report, Kedah Oil Palms Estate was last revalued in 2016 and had a book value of RM22.5 million; and Bukit Mertajam Estate’s book value in 2016 was RM199.7 million.

For KTPC, whose land bank is shrinking, the acquisition is timely. “The [1,200-acre] expansion is a necessity for future developments and comes in at the right time,” says another source familiar with the acquisition.

KTPC’s financials have improved over the past few years. For its financial year ended December 2022, it chalked up after-tax profits of RM83.06 million on the back of RM236.92 million in revenue. In stark contrast, it had mustered a meagre after-tax profit of RM1.6 million from RM50.92 million in turnover in FY2018.

As at end-2022, KTPC had total assets of RM1.06 billion and total liabilities of RM364.1 million, all of which were long-term borrowings. The company had retained earnings of RM520.26 million as at end-2022.

The deal would raise funds for Boustead Holdings and its parent LTAT.

Former minister of defence Datuk Seri Mohamad Hasan told Dewan Rakyat last September that Boustead Holdings needed RM1.7 billion to redeem Islamic debt papers by end-2023 and an additional RM800 million to service its other obligations. The Ministry of Finance reportedly agreed to provide a RM2 billion “not a bailout” guarantee for LTAT’s buyout of BPlant at RM1.55 per share.

LTAT, which has about RM11 billion in assets under management, is the pension fund for more than 140,000 veteran armed forces personnel and 115,000 members of the armed forces.

For the quarter ended March 31, 2023 — the last earnings release prior to its RM700 million privatisation by LTAT — Boustead Holdings had almost RM4 billion in borrowings, with a maturity period of less than 12 months. On the other side of the balance sheet, its deposits, cash and bank balances stood at only RM565.8 million. Boustead Holdings’ total debts stood at RM10.56 billion at the end of March last year.

Recently, the Public Accounts Committee highlighted the Auditor General’s Report 2022, saying that LTAT’s reserves had been in negative territory for three consecutive years: RM376 million in 2020, RM285 million in 2021 and RM338 million in 2022.

While LTAT’s negative reserves were recently disputed by Minister of Defence Datuk Seri Mohamed Khaled Nordin, Boustead Holdings clearly needs cash to pare down its debts.

Other companies in which LTAT and Boustead Holdings hold equity interest include Pharmaniaga Bhd (60.45%) and Boustead Heavy Industries Corp Bhd (73.16%), both of which are undergoing restructuring. 

Bukit Mertajam Estate, Kulim,

Kedah

2,727.1 hectares  Oil palm estate Freehold 207,100,000 

2,727.1 hectares

to convert hectares to acres

multiply 2,717.1 by 2.471

= 6,713.95 acres

to get cost per acre

divides Rm207,100,000 by 6,713.95 acres

= Rm30,846 per acre

Now This is Up by over 1,000%!!

Now if 1,200 acres command Rm400 Millions

220,000 Acres = Rm73,333,333,333.3

More than Rm73.3 BILLIONS WORTH

How much per share?

Rm32.77

AMAZING

LTAT took Bplant private at Rm1.55

When Its Real Time Value After Privatisation shows Rm32.77 a share

Can we give Rm32.77 as final value?

Of course not!

Only lands with Commercial/Industrial potential can command premium prices

Since Bplant also got lands in lesser location we will assign a 70% discount

So Rm32.77 X .3

= Rm9.83 

Yes that should be a fair Value for Bplant

Regards

Calvin Tan