RHB Research said TH PLANTATION []s Bhd remains an undervalued stock which would appeal to both growth and defensive investors.
The research house, which reiterated its Outperform recommendation, said on Wednesday, Jan 26 it had adjusted its earnings for FY10-12 by +2.8%, -3.5% and -3.7%, respectively.
“Based on an unchanged target PE of 11x FY11, our fair value is trimmed to RM2.70 (from RM2.80). This implies an upside of 33%, which does not even include its attractive dividend yield of 4.5-7.5% per annum,” it said.
“We understand that THP is currently in advanced stages of negotiation to acquire two pieces of landbank, one in Indonesia and one in Sarawak, and intends to complete at least one acquisition by end-1H2011, with another potentially, by end-2011 or if not, early 2012. These acquisitions will not be an injection of land by Tabung Haji, but independent acquisitions by THP.
“The landbank under consideration is a piece of brownfield land in Indonesia (East Kalimantan) and a piece of greenfield land in Sarawak. Assuming each is about 10,000ha (which is the minimum landbank size that THP would consider for any acquisition), there is a possibility that THP’s total landbank size could grow by 50% by year-end, although total planted landbank may only grow by 25%,” it said.
The research house, which reiterated its Outperform recommendation, said on Wednesday, Jan 26 it had adjusted its earnings for FY10-12 by +2.8%, -3.5% and -3.7%, respectively.
“Based on an unchanged target PE of 11x FY11, our fair value is trimmed to RM2.70 (from RM2.80). This implies an upside of 33%, which does not even include its attractive dividend yield of 4.5-7.5% per annum,” it said.
“We understand that THP is currently in advanced stages of negotiation to acquire two pieces of landbank, one in Indonesia and one in Sarawak, and intends to complete at least one acquisition by end-1H2011, with another potentially, by end-2011 or if not, early 2012. These acquisitions will not be an injection of land by Tabung Haji, but independent acquisitions by THP.
“The landbank under consideration is a piece of brownfield land in Indonesia (East Kalimantan) and a piece of greenfield land in Sarawak. Assuming each is about 10,000ha (which is the minimum landbank size that THP would consider for any acquisition), there is a possibility that THP’s total landbank size could grow by 50% by year-end, although total planted landbank may only grow by 25%,” it said.
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