Boustead Plantation was informed by BHB and LTAT that the strategic collaboration agreement has been terminated on 4 Oct 2023. KLK also announced likewise. The reason given was the “Condition Precedent under the SCA will not be satisfied by the Cut Off date” of 6 Oct 2023.
Kenanga said this did not come as a total surprise as the signing of the agreement had been postponed twice, initially from 11 Sept to 22 Sept and then to 6 Oct. BPLANT also announced that LTAT is now undertaking the MGO instead of KLK. In a separate announcement, BPLANT stated that LTAT will now step in and continue with the MGO to take BPLANT private at the same offer price of RM1.55 per share as before.
On an earnings basis, the MGO price of RM1.55 rates BPLANT at 82x FY24F PER which is high. Even on PBV basis, RM1.55 rates BPLANT at 1.3x which is still at a premium to the plantation sector, albeit just not as high as the premium on PER basis. As explained above, the offer price is based closer to the current value for plantation land which is reasonable.
Based on the latest outcome, the house maintains its call to ACCEPT OFFER at TP of RM1.55 which is also the MGO price. Kenanga welcomes the MGO as it allows BPLANT shareholders to exit at a better valuation than the equity market would have been ready to offer. Many smaller plantation groups typically trade at discounts to even their NTA.
