Genting Plantation is attractively priced as the market has under-appreciated the value of its 16,908 ha of strategic freehold land and other assets says Maybank IB.
The share trades at just 0.9x PBV (- 2.3SD of 10-yr mean), and 0.33x Mayabank’s RNAV estimate of MYR15.88/shr. GENP is a BUY with an unchanged MYR6.08 TP on 19x FY23E PER (its -1SD of 8-yr mean). Its immense RNAV offers downside support while its valuable landbank offers good inflationary hedge over the long run.
The group 16,908 ha freehold land worth more than its market cap, it is one of the largest freehold land owners in Peninsular Malaysia with 61% located in Johor, 18% in Malacca & Negeri Sembilan, 18% in Kedah & Perak, and 3% in Selangor (ie. Sepang). The group continues to carry these valuable assets at their book values. As these lands were amassed progressively since 1981, and strategically located on highly populated areas of the west coast of PM, we estimate these freehold land to be worth MYR7.25b or 1.5x GENP’s current market cap.
Its 10,397 ha Johor land is worth MYR5,656m of which 2,555 ha are located in the Iskandar region, making GENP one of
the largest landowners in Iskandar. GENP has two active township projects in Johor – at Kulai and Batu Pahat. Since the 1990s, Genting Plantation has been monetising some of its prime estate lands via property developments.
GENP has focused on aggressively growing its oil palm planted area from 48,710 ha in 2003 to 138,301 ha in 2022, translating to a CAGR of 5.4%. As land values in Malaysia appreciate, most of GENP’s oil palm expansion over the last two decades shifted to Indonesia. Naturally, the oil palm division is the larger profit contributor, accounting for 67%-95% of its yearly group core PBIT over the past 10 years, with the balance contributed by the property division. In the past, the property division has helped to weather the earnings of the group during periods of low oil palm profits.
