PETALING JAYA: A deal may be brewing at Genting Plantations Bhd , whose stock is just off its all-time high, industry sources said. The shares have risen by some 10.5% year-to-date and closed yesterday up 10 sen, or 1%, at RM9.51. It hit a record high of RM9.65 on Jan 26.
“One can’t rule out a potential sale of the plantations division by the Genting group. “While it is cashflow producing, it isn’t exactly their core business,” a banking source said. But
at its current price, Genting Plantations has a market capitalisation
of some RM7.18bil, which makes it an expensive acquisition target by any
party. It is trading at an estimated price-to-earnings ratio of 16 times for the 2012 financial year, somewhat higher than its peers United Plantations Bhd (12 times), and Sime Darby Bhd (15 times), but cheaper than IOI Corp Bhd ’s 17 times.
Another positive factor for Genting Plantations, an analyst said, was its bustling Johor Premium Outlets (JPO).
The
mall, which sells off-season luxury items at a discount, is the only
Premium Outlet in South-East Asia, while 58 others are in countries such
as the United States, Japan and South Korea. Its stable of
brands include Armani, Burberry, Canali, Coach, Ermenegildo Zegna,
Guess, Michael Kors, Ralph Lauren and Salvatore Ferragamo.
JPO is a 50:50 joint venture between Genting Plantations, a Genting Bhd subsidiary, and Premium Outlets, the retail outlet division of Simon Property Group Inc. Under
the second phase of its development, Genting plans to spend RM100mil to
increase the number of stores to 130 from the present 70.
The
company is also expected to invest up to RM1bil to develop the area,
including constructing a 2,000-room hotel and a water theme park and a
meeting, incentive, conference and exhibition centre. Genting Plantations could not be reached for comment.
Meanwhile, its parent Genting slid 16 sen, or 1.6%, to RM10.30. Both Genting and Genting Malaysia Bhd
have seen some selldown in their stock after the Florida legislature
delayed voting on a bill to expand casino gambling activities in the
state till next year.
The decision put a dent in Genting’s plans for its US$3.8bil Resorts World Miami.
