KUALA LUMPUR: Genting Plantations Bhd, via its indirect wholly-owned Indonesian subsidiaries, is acquiring two parcels of contiguous land in Jakarta totalling 152 hectares for 2.052 trillion rupiah (RM593 million).
The plantation and property development group said its units PT Genting Properti Abadi and PT Genting Properti Jaya inked separate conditional agreements with PT Sentul City TBK, PT Aftanesia Raya and PT Primatama Cahaya Sentosa to acquire the land.
PT Genting Properti Abadi is acquiring 80 hectares within the Sentul City township for RM509.8 million while PT Genting Properti Jaya is buying a 72-hectare parcel contiguous with the former land for RM83.2 million, it said in a filing with Bursa Malaysia.
“The proposed acquisitions provide an opportunity for Genting Plantations, through its indirect wholly-owned Indonesian subsidiaries, to undertake property development-related activities in line with the objective of its Indonesian expansion.
“In doing so, Genting Plantations will be able to establish its presence in the Jakarta property market which may offer other opportunities to further its Indonesia expansion initiative,” it said.
Genting Plantations said the proposed acquisitions are expected to be completed in the first quarter of 2025.
In a note, Kenanga Investment Bank Bhd said the acquisition would increase the company’s estimated end-FY2025 net debt of RM1.23 billion (22% net gearing) to RM1.58 billion (29% net gearing), which is still quite contained and manageable.
“We believe Genting Plantations is probably also laying the groundwork for another possible Premium Outlets in Greater Jakarta and the potential property demand uplift following such an opening.
“Therefore, we trim our FY2025 forecast earnings by 3% to account for higher finance cost, while property sales from Sentul City are unlikely to come in within our forecast period,” it said.
As such, Kenanga Investment maintained a ‘market perform’ call on the company with a target price of RM6.
Meanwhile, Maybank Investment Bank Bhd also maintained its earnings forecasts as the land acquisition would increase Genting Plantations proforma net gearing (as at end of March 2024) to 34% from 22%, if the entire purchase consideration is paid upfront.
On the other hand, Hong Leong Investment Bank Bhd noted the latest proposed acquisitions would result in Genting Plantations’ net debt and net gearing increasing to RM1.7 billion and 0.32 times from RM1.2 billion and 0.22 times as of 3 March 2024.
“Earnings impact, on the other hand, will likely be muted in the near term. We maintain earnings forecasts with a target price of RM5.80 and ‘hold’ rating on Genting Plantations for now, pending more updates from management,” it said.
— BERNAMA
