External broker reports(aggregated public sources), TA Securities Holdings Berhad

TA Securities Holdings Bhd

External broker reports(aggregated public sources)

Equity Bottom-Up

<div class="content-highlight">Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</div>

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Taking Action for the Sustainable Development Goals

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<a href="https://www.smartkarma.com/entities/kuala-lumpur-kepong-bhd" target="_blank" data-smartkarma-citation="entities:17039:1" rel="noopener">Kuala Lumpur Kepong (KLK MK)</a> made an offer to acquire <a href="https://www.smartkarma.com/entities/ijm-corp-bhd" target="_blank" data-smartkarma-citation="entities:16784:1" rel="noopener">Ijm Corp Bhd (IJM MK)</a>/IJMC’s entire stake in <a href="https://www.smartkarma.com/entities/ijm-plantations-bhd" target="_blank" data-smartkarma-citation="entities:12967:1" rel="noopener">Ijm Plantations (IJMP MK)</a>/IJMP for RM3.10 per share in cash, subject to potential dividend adjustments. The offer price is a 26% premium to the unaffected price of RM2.46 per share (prior to the trading halt on 8 June).IJMC is IJMP’s largest shareholder and owns 494.9 million shares, representing 56.2% of outstanding shares. The proposed acquisition implies a cost of RM1.53 billion ($371.7 million). KLK’s offer is subject to IJMC’s acceptance and execution of the definitive agreement (SPA) on or before 5.00 p.m. on 11 June 2021 or such a mutually extended date, failing which the offer will lapse. IJMC has stated that is agreeable to finalise the terms with KLK to meet the offer deadline. IJMP is listed on the Main Markets of Bursa Malaysia. In Malaysia, the threshold for triggering a mandatory general offer (MGO) is the offeror and concert parties owning 33% or more of the voting shares. If the SPA becomes unconditional, KLK will be required to extend a mandatory general offer to acquire all the remaining IJMP shares for a cash offer price of RM3.10 per share, subject to potential dividend adjustments.  <div class="content-highlight">A key condition precedent for the SPA is approval by both IJMC and KLK shareholders at their respective EGMs. We think that the deal should gain EGM approval as it is attractive to both IJMC and KLK shareholders. Overall, at the last close price, the downside risk is low (trading close to break price) with a good probability of upside (SPA becoming unconditional).  </div>

Kuala Lumpur Kepong (KLK MK) made an offer to acquire Ijm Corp Bhd (IJM MK)/IJMC’s entire stake in Ijm Plantations (IJMP MK)/IJMP for RM3.10 per share in cash, subject to potential dividend adjustments. The offer price is a 26% premium to the unaffected price of RM2.46 per share (prior to the trading halt on 8 June).IJMC is IJMP’s largest shareholder and owns 494.9 million shares, representing 56.2% of outstanding shares. The proposed acquisition implies a cost of RM1.53 billion ($371.7 million). KLK’s offer is subject to IJMC’s acceptance and execution of the definitive agreement (SPA) on or before 5.00 p.m. on 11 June 2021 or such a mutually extended date, failing which the offer will lapse. IJMC has stated that is agreeable to finalise the terms with KLK to meet the offer deadline. IJMP is listed on the Main Markets of Bursa Malaysia. In Malaysia, the threshold for triggering a mandatory general offer (MGO) is the offeror and concert parties owning 33% or more of the voting shares. If the SPA becomes unconditional, KLK will be required to extend a mandatory general offer to acquire all the remaining IJMP shares for a cash offer price of RM3.10 per share, subject to potential dividend adjustments.  A key condition precedent for the SPA is approval by both IJMC and KLK shareholders at their respective EGMs. We think that the deal should gain EGM approval as it is attractive to both IJMC and KLK shareholders. Overall, at the last close price, the downside risk is low (trading close to break price) with a good probability of upside (SPA becoming unconditional).  

IJM Plantations’ Potential MGO from Kuala Lumpur Kepong

Over 25-yrs in Global Materials & Soft Commodities

Charles Spencer

Alpha Factors

INVESTMENT CONCLUSION: We recommend avoiding shares linked to the Indonesian plantation sector, like <a href="https://www.smartkarma.com/entities/golden-agri-resources-ltd" target="_blank" data-smartkarma-citation="entities:1142:1" rel="noopener">Golden Agri Resources (GGR SP)</a> and <a href="https://www.smartkarma.com/entities/wilmar-international-ltd" target="_blank" data-smartkarma-citation="entities:172:1" rel="noopener">Wilmar International (WIL SP)</a> until the risks associated with a recent spike in transboundary haze passes.  Over the past few days, there has been a sharp deterioration in air pollution throughout Southeast Asia as a result of an escalation of fire clearing activities across Sumatra and Kalimantan.

INVESTMENT CONCLUSION: We recommend avoiding shares linked to the Indonesian plantation sector, like Golden Agri Resources (GGR SP) and Wilmar International (WIL SP) until the risks associated with a recent spike in transboundary haze passes.  Over the past few days, there has been a sharp deterioration in air pollution throughout Southeast Asia as a result of an escalation of fire clearing activities across Sumatra and Kalimantan.  

Golden Agri & Wilmar – Avoid till the Smoke Clears

INVESTMENT VIEW: The Australian Bureau of Meteorology raised its ENSO Outlook back to El Nino ALERT from WATCH, which is linked to regional droughts, lower yields and higher prices for agriculture across South East Asia.  As such, we believe the recent correction in Crude Palm Oil (CPO) prices is over and recommend buying back into shares of key producers with leverage to higher CPO prices, like <a href="https://www.smartkarma.com/entities/1142" target="_blank" data-smartkarma-citation="entities:1142:1">Golden Agri Resources (GGR SP)</a> (GAR).

INVESTMENT VIEW: The Australian Bureau of Meteorology raised its ENSO Outlook back to El Nino ALERT from WATCH, which is linked to regional droughts, lower yields and higher prices for agriculture across South East Asia.  As such, we believe the recent correction in Crude Palm Oil (CPO) prices is over and recommend buying back into shares of key producers with leverage to higher CPO prices, like Golden Agri Resources (GGR SP) (GAR). 

Golden Agri: El Nino Back on the Front Burner; Bullish Catalyst for GAR

APAC Ex-Japan & China Analyst

Nandini Vijayaraghavan, CFA

Finsights Research

Our core competencies include counterparty analysis and credit rating of corporates, banks and government linked entities, debt structuring, credit risk management, and penning financial and investment research.

Counterparty & Credit Analysis

<a href="https://www.smartkarma.com/entities/11313" target="_blank" data-smartkarma-citation="entities:11313:1">Genting Plantations Bhd (GENP MK)</a>, the smallest among Malaysia’s big three pure play oil palm plantation companies, is fairly valued at its current price of MYR10.74, underpinned by its<ul><li> Young plantation age profile,</li><li>Ability to maintain a healthy EBITDA per hectare through the business cycle, and</li><li>Attractive price to earnings and price to book value ratios in relation to its domestic peers including <a href="https://www.smartkarma.com/entities/1145" target="_blank" data-smartkarma-citation="entities:1145:1">Ioi Corp Bhd (IOI MK)</a>  and <a href="https://www.smartkarma.com/entities/17039" target="_blank" data-smartkarma-citation="entities:17039:1">Kuala Lumpur Kepong Bhd (KLK MK)</a></li></ul>Upside potential to the stock is limited by the consistent generation of negative free cash flows, and under-leveraged capital structure. Financial leverage i.e., the ratio of net lease adjusted debt to EBITDAR, which is the sum of EBITDA and operating lease rentals, was 0.71x as of March 31, 2017.GENP’s adherence to Environmental, Social &amp; Governance (ESG) practices is average. The Zoological Society of London ranks GENP 27th among 50 oil palm producers in ESG practices.

Genting Plantations Bhd (GENP MK), the smallest among Malaysia’s big three pure play oil palm plantation companies, is fairly valued at its current price of MYR10.74, underpinned by its Young plantation age profile,Ability to maintain a healthy EBITDA per hectare through the business cycle, andAttractive price to earnings and price to book value ratios in relation to its domestic peers including Ioi Corp Bhd (IOI MK)  and Kuala Lumpur Kepong Bhd (KLK MK)Upside potential to the stock is limited by the consistent generation of negative free cash flows, and under-leveraged capital structure. Financial leverage i.e., the ratio of net lease adjusted debt to EBITDAR, which is the sum of EBITDA and operating lease rentals, was 0.71x as of March 31, 2017.GENP’s adherence to Environmental, Social &amp; Governance (ESG) practices is average. The Zoological Society of London ranks GENP 27th among 50 oil palm producers in ESG practices.

Genting Plantations Berhad: Young Plantations, But Fairly Valued on Negative FCF

Malaysia

IOI Corporation Berhad cultivates and processes oil palm and rubber.  The Company, through its subsidiaries, operates in property development and investment, provides landscape services, and sells ornamental plants and turfing grass. IOI Corporation also manufactures industrial and medical gases, and provides building, engineering, and construction services.

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IOI Corp Bhd (IOI MK)

Taking Action for the Sustainable Development Goals

Buy Ioi Corporation Berhad: Taking Action for the Sustainable Development Goals. - By: TA Securities Holdings Bhd

TA Securities Holdings Bhd

IJM Plantations’ Potential MGO from Kuala Lumpur Kepong

KLK MK made an offer to acquire IJMC’s entire stake in IJMP for RM3.10 per share in cash, subject to potential dividend adjustments. If the SPA...

Arun George

Golden Agri & Wilmar – Avoid till the Smoke Clears

INVESTMENT CONCLUSION: We recommend avoiding shares linked to the Indonesian plantation sector, like Golden Agri Resources (GGR SP) and Wilmar...

Charles Spencer

Golden Agri: El Nino Back on the Front Burner; Bullish Catalyst for GAR

INVESTMENT VIEW:The Australian Bureau of Meteorology raised its ENSO Outlook back to El Nino ALERT from WATCH, which is linked to regional...

Charles Spencer

Genting Plantations Berhad: Young Plantations, But Fairly Valued on Negative FCF

Genting Plantations Bhd (GENP MK), the smallest among Malaysia’s big three pure play oil palm plantation companies, is fairly valued at its current...

Nandini Vijayaraghavan, CFA

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