Latest news with #RM333.8
The Star
3 days ago
- Business
- The Star
Genting Plantations shares up on JV announcement
KUALA LUMPUR: Genting Plantations Bhd 's shares on Bursa Malaysia went up in early trade today, after announcing a joint venture (JV) into vegetable farming in Kulai with an established Chinese partner. As at 10 am, the counter rose 2.0 sen to RM4.97 with a total of 7,800 shares changing hands. Maybank Investment Bank Bhd foresaw that the JV with Shandong Shouguang will likely net an immediate property development profit of over RM20 million, or a 6.0 per cent increment, to financial year 2026 estimates if it is developed on Genting Plantations's land. "We believe the 28.328-hectare development will likely be located on Genting Plantations's land in Kulai, helping unlock the value of its land in Johor-Singapore Special Economic Zone and making some development profits at the onset. "As Genting Plantations will still own 60 per cent of the JV, it can only recognise the disposal gains of 40 per cent of its land sales and development profits on this transaction,' it said in a note today. In a filing with Bursa Malaysia yesterday, Genting Plantations said its indirect wholly-owned subsidiary ACGT Vegetable AgVentures Sdn Bhd (AVA) has proposed to undertake a JV with Shouguang Vegetable Science and Technology Sdn Bhd (SVST). "The proposed JV will be implemented via the setting up of two joint venture companies, namely JV Technology Company and JV Operating Company, wherein AVA and SVST will hold 60 per cent and 40 per cent of shares in both these joint venture companies, respectively,' the group said. Meanwhile, CIMB Securities Sdn Bhd said the project is unlikely to be earnings-accretive in the near term, given the high upfront capital expenditure required for technology acquisition and seed-breeding or research and development facilities. "The JV also represents a diversification away from Genting Plantations's core palm oil business. That said, proceeds from its recent disposal of agricultural land in Melaka to Scientex for RM333.8 million should be sufficient to fund this investment,' it said. - Bernama
New Straits Times
3 days ago
- Business
- New Straits Times
Genting Plantations seed venture to bolster diversification
KUALA LUMPUR: Genting Plantations Bhd's venture into the vegetable seeds business could accelerate its diversification beyond palm oil and unlock recurring income from high-value crops, Public Investment Bank Bhd (PublicInvest) said. Under the joint venture (JV) agreement, Genting Plantations will establish two JV companies with Shouguang Vegetable Science and Technology S/B (SVST). Genting Plantations will hold a 60 per cent stake through AGCT Vegetable AgVentures S/B, while SVST will own the remaining 40 per cent in both JV companies. The collaboration aims to develop about 28 hectares in Kulai, Johor, into a tropical vegetable centre of excellence, serving as a hub to promote sustainable growth and strengthen food security. PublicInvest noted that leveraging SVST's vast experience could help accelerate the business development. "The new business venture will help Genting Plantations reduce its heavy reliance on the upstream palm oil segment while unlocking a recurring revenue stream in the high-value vegetable crops market. "Genting Plantations plans to fund the business through internal funds or bank borrowings, which should not pose an issue given its current low gearing position of 0.23 times and sizeable cash reserves of RM1.9 billion. "Based on Genting Plantations' 60 per cent stake in both JV companies, it is required to fork out about RM315 million," it said in a research note. Separately, PublicInvest said Genting Plantations' second quarter results for the financial year 2025 are scheduled to be released on Aug 27, and it expects another solid performance. This outlook is underpinned by steady crude palm oil prices and moderate fresh fruit bunch production growth. The firm has reiterated its "Outperform" call on Genting Plantations, with an unchanged target price of RM5.61. Meanwhile, CIMB Securities Sdn Bhd views the proposed JV as neutral, noting that it will broaden the group's exposure to seed breeding, research and development (R&D), and greenhouse production. However, it expects limited near-term earnings contribution due to the likely high upfront capital expenditure (capex). "Genting Plantations' 60 per cent share of the potential investment in the JV companies amounts to about RM315 million, and we believe the project is unlikely to be earnings-accretive in the near term given the substantial upfront capex required for technology acquisition and seed-breeding R&D facilities. "The JV also represents a diversification away from Genting Plantations' core palm oil business. "That said, proceeds from its recent disposal of agricultural land in Melaka to Scientex Bhd for RM333.8 million should be sufficient to fund this investment," it noted. CIMB Securities has maintained a "Hold" rating on Genting Plantations with an unchanged target price of RM5.28.
