Al-Hadharah Boustead REIT BUY
Price target RM1.70
Share price at 6 August RM1.15
Investment summary
H108 results were in-line with HLG expectations, and it is proposing to acquire 3750ha mature plantation land from parent Boustead for RM192m in new shares and cash. We think the deal is marginally yield-accretive, and re-affirms our BUY rating.
We prefer Al-Hadharah REIT to traditional plantation companies due to: (1) high dividend payout of 90% vs. peers’ average of 50-60%; (2) lower dividend tax for REITs, with the possibilities of future tax incentives from the Aug08 Budget. (3) high yield of 10% FY09E net DY, even when factoring-in the recent CPO price correction.
Near-cash proxy
Share price has fallen 20% in the last 2 mths, and indicative DY is >10%, even when pricing-in RM2500/mt CPO. Stock is attractive on a 1-yr holding period.
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Friday 29 August 2008
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