Undervalued Plantation Firms Could Become Privatisation Targets

Small- and mid-cap plantation companies that trade at steep 37 to 49 per cent discounts to average transacted estate prices could be prime privatisation targets, said Maybank Investment Bank Bhd (Maybank IB). NSTP/DANIAL SAAD

Small- and mid-cap plantation companies that trade at steep 37 to 49 per cent discounts to average transacted estate prices could be prime privatisation targets, said Maybank Investment Bank Bhd (Maybank IB).

This comes amid rising merger and acquisition (M&A) activity in the plantation sector, with about RM2.06 billion worth of deals announced so far this year alongside firm crude palm oil prices.

Maybank IB expects the momentum to continue into 2026, driven by the monetisation of prime estates by players such as SD Guthrie Bhd, Genting Plantations Bhd and Kuala Lumpur Kepong Bhd.

Maybank IB highlighted Sarawak Oil Palms Bhd and Hap Seng Plantations Holdings Bhd among its preferred candidates, while maintaining SD Guthrie and Sarawak Oil Palms as its top "Buy" calls.

The M&A momentum has nearly doubled year-on-year, following major privatisation exercises such as FGV Holdings Bhd and Boustead Plantations Bhd.

FGV's privatisation in August, estimated to cost the Federal Land Development Authority up to RM600 million, lifted total plantation-related deals this year to RM2.06 billion. About 45 per cent of the total value in 2025 was linked to property development purposes.

One notable transaction was SD Guthrie's sale of 484 hectares of Malaysia Vision Valley 2.0 land for RM573 million, or RM1.6 million per hectare — about 33 times higher than the average estate land price of RM49,100 per hectare between 2023 and 2025.

Regionally, First Resources Ltd's March 2025 acquisition of a 91.2 per cent stake in PT Austindo Nusantara Jaya Tbk for US$330 million (RM1.47 billion) valued its 48,353 hectares at US$10,202 (RM45,383) per hectare on an enterprise-value basis.

Maybank IB said the motivations behind the sector's M&A and privatisation wave include compliance with no deforestation, no peat and no exploitation (NDPE) policies, which have increased demand for brownfield assets, and efforts to unlock value from legacy estates.

It added that rising cost pressures, labour shortages and undervalued land assets are fuelling consolidation, as listed planters continue to trade below replacement-cost levels.

Sarawak Oil Palms' implied enterprise value (EV) stands at about RM25,000 per hectare, while TAH is valued around RM36,000, both below replacement cost.

Maybank IB said Sarawak Oil Palms and Hap Seng Plantations are supported by strong balance sheets, making them compelling privatisation or takeover prospects.

Sarawak Oil Palms currently trades at RM25,001 EV per planted hectare, 0.76 times price-to-book value (PBV) and seven times FY2026 earnings, with a net cash position of RM1.41 per share.

Hap Seng Plantations trades at RM32,556 EV per hectare, 0.82 times PBV and 11.6 times FY2026 consensus earnings, with net cash of 74 sen per share.

Another underappreciated name, Chin Teck Plantations Bhd, trades at RM26,387 EV per hectare, 0.96 times PBV and nine times historical earnings, backed by a net cash balance of RM5.27 per share.

Maybank IB said the combination of undervalued land assets and solid financial positions makes these companies standout candidates amid the sector's ongoing consolidation wave.

Source: www.nst.com.my