By Ying Xian Wong
Boustead Plantations shares rose early Monday after local media reported that at least four bidders are lining up to acquire a majority stake in the Malaysian agricultural company.
Shares rose as much as 10% and were recently trading at 0.96 ringgit ($0.21), up 7.9%. Year-to-date gains stand at 49%, including a 43% gain this month alone.
The Edge Weekly reported in a publication dated Monday that Boustead Holdings is looking to dispose of its 57% stake in Boustead Plantations, with YTL Corp. Bhd., IOI Corp. Bhd., Wilmar International and Kuala Lumpur Kepong among bidders for the stake.
A spokeswoman for both Boustead Holdings and Boustead Plantations told The Wall Street Journal that she didn’t have any details about plans for a stake disposal.
KLK was 5.1% higher in early trading, while the other three reported bidders were 0.5% to 1.5% lower.
Maybank Investment Bank analyst Ong Chee Ting on Monday kept a hold rating on Boustead Plantations, saying that any buyers will likely push for a discount on shares. “Potential buyer(s) is likely to require a hefty discount to factor in huge capex requirements to turn around Boustead Plantations’ aging trees, as 46% of its oil palm trees are past prime (i.e. >20 yrs old),” he wrote in a research note.
The analyst advised shareholders “to hold out for a potential general offer,” saying the upside is likely capped at the company’s net tangible asset value of MYR1.30/share. He cautioned, however, that “failure to seal a deal may cause [the company’s] share price to give back recent gains.”
Maybank raised its target price on Boustead Plantations to MYR0.92 from MYR0.72.
Write to Ying Xian Wong at yingxian.wong@wsj.com
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