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Indicative offer price for Boustead Plantations at RM1.60 a share


Boustead Holdings Bhd deputy chairman and group managing director Tan Sri Lodin Wok Kamaruddin at media briefing after the group AGM and EGM on Monday. FAIHAN GHANI/The Star.

PETALING JAYA: Boustead Holdings Bhd (BHB) expects to raise RM928mil from the proposed listing of its plantation arm, Boustead Plantations Bhd, at an indicative offer price of RM1.60 a share.

BHB deputy chairman and group managing director Tan Sri Lodin Wok Kamaruddin (pic) said the group was planning for the initial public offering (IPO) to take place between end-May and mid-June.

“The timing for the listing is good, as we expect crude palm oil (CPO) prices to improve during that period, and hope to get the maximum benefit from it as well as market demand for our CPO,” he told reporters after the group’s EGM yesterday, where shareholders approved the listing.

In a circular to shareholders, the group said RM420mil or 45.3% of the total gross proceeds would be used to beef up Boustead Plantations’ landbank, RM390mil or 42% for the repayment related to Boustead REIT’s (BREIT) privatisation, and the rest for replanting and capital expenditure as well as to pay for the IPO expenses.

Lodin said the company was looking to expand Boustead Plantations’ landbank, both greenfield and brownfield, mainly in Sabah and Sarawak.

“At the moment, we are focusing on improving our efficiency and production of our oil palm estates,” he said.

Boustead Plantations plans to grow its landbank by 20,000ha from its current total planted area of 71,092ha within five years.

Half of the acquisition is to be financed by the IPO proceeds and by debt instruments, if required, while further fund-raising will cover the rest. It is offering up to 656 million shares of its enlarged 1.6 billion share base, comprising 580 million new shares and 76 million shares under the offer for sale.

Some 174.59 million and 206.84 million shares would be set aside for BREIT and BHB shareholders, respectively.

The entitlement offer is one Boustead Plantations share for every five BHB shares, and three Boustead Plantations shares for every five BREIT shares.

The remaining 47 million and 64 million shares for retailers have been apportioned for directors and staff and the Malaysian public.

BHB is also expecting to raise additional total gross proceeds of RM121.6mil from the offer for sale shares, with the allotment option expected to raise up to RM224mil.

BHB intends to maintain a controlling stake of 59% in Boustead Plantations and has committed a dividend payout of 60%.

The “illustrative” retail price of RM1.60 per IPO share was based on an approximate 16 times price earnings multiple (P/E) on an earnings per share (EPS) of about 10 sen.

The EPS took into account Boustead Plantations’ after-tax profit of RM159.7mil for the financial year 2013 estimate, it said.

The indicative offer price was at a discount to the prevailing valuations of comparable plantation firms such as Sarawak Plantation Bhd at a P/E of 18.24 times, IJM Plantations Bhd at 22 times and Hap Seng Plantations Holdings Bhd at 21 times.

Lodin expected CPO prices to maintain between RM2,600 and RM2,700 per tonne this year. Yesterday, the CPO price was at RM2,623 per tonne.


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