Bumitama Agri - RHB Invest 2016-02-04: Buy 95% stake in Indonesian Plantation Company

BUMITAMA AGRI LTD P8Z.SI

Bumitama Agri (BAL SP): Buy 95% stake in Indonesian Plantation Company

Bumitama has entered into the an agreement with PT. Sukses Manunggal Sawitindo (SMS) and PT. Karya Manunggal Sawitindo (KMS), to acquire a 95% stake in PT. Gunajaya Harapan Lestari (GHL) for IDR76.96m (or approximately S$7.9m).
GHL has an Ijin Lokasi for an oil palm plantation in Ketapang, West Kalimantan, of which 2,982 ha has been planted (but immature).

The acquisition is in line with the Group’s expansion plan to increase the hectarage of its land bank, while the landbank is near Bumitama’s existing landbank, which will allow the sharing of resources like labour and infrastructure.
In terms of pricing, for 2,982ha of planted land for a 95% stake, Bumitama is essentially paying USD1,760/ha, which is fair, in our opinion.
The pricing is in line with average transactions for immature planted areas in Indonesia of between USD700-2,000/ha.
Although the NTA and net profit is currently negative, this should improve going forward as the plantation matures.
BUY, TP: SGD1.41

Singapore Research RHB Invest | http://www.rhbinvest.com.sg/ 2016-02-04

RHB Invest SGX Stock Analyst Report BUY MAINTAIN BUY 1.41 Same 1.41