Analyst Neutral On Genting Plantation Over New Vege Venture
The venture will be carried out through GENP's subsidiary ACGT Vegetable AgVentures (AVA), which will hold a 60% stake alongside CSV's unit Shouguang Vegetable Science and Technology (SVST) with 40%. The partners plan to develop 70 acres in Kulai, Johor, into a tropical vegetable hub encompassing seed breeding and research, greenhouse farming, food processing and a technology showcase centre.
Two joint venture companies will be formed, with a combined estimated paid-up capital of RM525 million. About RM210 million will go towards acquiring technology and expertise from SVST, while the remaining RM315 million will be allocated for project development, land acquisition and working capital. GENP's share of the investment is expected to be around RM315 million, which CIMB Securities said is unlikely to be earnings-accretive in the near term due to high upfront capital expenditure.
The analyst noted that the JV reflects GENP and CSV's shared ambition to build a holistic agribusiness ecosystem in Johor by combining GENP's genomics expertise with CSV's germplasm library to produce climate-resilient, high-yield vegetables. CSV's integrated seed-to-fork model, covering breeding, processing, logistics, e-commerce and food manufacturing, is expected to complement GENP's market access and brand presence.
While the diversification represents a shift away from GENP's traditional palm oil business, CIMB Securities highlighted that funding should not be an issue following the company's recent disposal of agricultural land in Melaka to Scientex Bhd for RM333.8m. Completion of the JV agreements is targeted for the first quarter of 2026, with no shareholder or regulatory approvals required.
The house concluded that the project, while strategically interesting, will not significantly alter GENP's earnings trajectory in the near term. GENP reported revenue of RM2.9 billion in FY2023, with core net profit of RM332 million and is forecast to book lower earnings in FY2024 and FY2025 before recovering modestly in 2026.
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